Private ruling: Residency status
Published: July 2011
Ruling period: Year ended 30 June 2010
Date scheme commenced: 1 July 2009

Ruling: Question and answer: | Are you a resident of Australia for income tax purposes? | No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(1). | Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision: Summary: An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are: · the resides test · the domicile test · the 183 day test · the superannuation test. The first two tests are examined in detail in Taxation Ruling IT 2650. The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of the word resides. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be a resident of Australia for tax purposes if they satisfy the conditions of one of the other three tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; having one's abode for a time', and according to the Compact Edition of the Oxford English Dictionary (1987), is 'to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'. Taxation Ruling IT 2650 provides guidelines for determining whether individuals who leave Australia temporarily to live overseas, for example, on temporary overseas work assignments or on overseas study leave, cease to be Australian residents for income tax purposes during their overseas stay. In your case you: · intended to lived and work overseas for a considerable period of time; · lived in long term rental accommodations during your time overseas; · were not accompanied by your family due to the security situation in the country you are working in; · have returned to Australia on a number of occasions to spend time with your family; · opened an overseas bank account; and · have returned to Australia to permanently reside in Australia due to the termination of your employment contract; On balance you are not considered to be a resident of Australia according to ordinary concepts under 'the resides' test as your ties to the country you are working in are considered stronger than those that you have in Australia. | Detailed Reasoning - The domicile test: If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. In your case, as you are still a citizen of Australia, it is considered your domicile is unchanged. The expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. In essence, a person's place of abode is that person's dwelling place or the physical surroundings in which a person lives. A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere. Some of the factors which have been considered relevant by the Courts, Boards of Review and Administrative Appeals Tribunal and which are used by the ATO in reaching a state of satisfaction as to a taxpayer's permanent place of abode include: · the intended and actual length of the taxpayer's stay in the overseas country; · whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time; · whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia; · whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence; · the duration and continuity of the taxpayer's presence in the overseas country; and · the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on. In your case you: · had resided overseas for X years; · intended to live and work overseas for an extended period; · had a contract for work overseas that was being extended on an on-going basis; · had long term overseas rental accommodation; · had opened an overseas bank account; and · had established social and sporting connections overseas. Based on the information that you have provided, your associations overseas are more significant than your associations with Australia. On balance and based on the above, the Commissioner is satisfied that you had established a permanent place of abode outside of Australia. Therefore, you are not a resident under the domicile test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You will not be a resident of Australia under this test because you were not in Australia for more than 183 days during the income year. | Detailed Reasoning - The Superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Only Commonwealth Government employees are eligible to contribute to the PSS or CSS. This test does not apply as neither you, nor your wife, are Commonwealth of Australia employees and therefore are not eligible to contribute to these super funds. Further you are over the age of 16 years old. Accordingly, you are not a resident under this test. | Detailed Reasoning - Your residency status: As you do not meet any of the tests of residency outlined in subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936, you are not considered to be an Australian resident for taxation purposes.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant facts: Your country of origin is Australia. You are an Australian citizen. | You are a civilian contractor and are employed on an overseas contract. | You have a multi entry work visa. | You began working overseas with the understanding that you would be working on a long term project. | Your initial employment contract was for a short period, however your contract has been renewed multiple times. | Your contract was terminated due to a change of service provider of your employer's contract. | You live and work overseas and had spent the majority of your time outside Australia (not including travel days). | The company that you work for pays your tax contribution directly to the Government of the country that you are working in. | You have returned to Australia on a number of occasions in the in the year that you have requested this ruling. | Your return flights to Australia were paid for by your employer. | While working overseas you lived in long term rental accommodation in the one country. | Your family continued to live in your house in Australia. Your family did not accompany you as the security situation overseas is unstable and unsafe. | You maintain contact with your family and Australian sports via the internet. | You have numerous friends and work colleagues living and working overseas whom you socialise and play sports with. | The other assets that you have in Australia are your car and contents. | Neither you or your spouse have held a position with the Commonwealth Government of Australia. | You returned to Australia to reside permanently after you contract was terminated. | Our records indicate that you are over the age of 16.