Private ruling: Residency
Published: April 2013
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2013

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

Relevant facts and circumstances: You are an Australian citizen. You are not married and do not have children. You are contracted to work for your employer from early 2010 to early 2016. You are employed in the capital city of Country X. You departed Australia in early 2010. You are not on the Australian electoral roll. You hold a 12 month work and residency permit (which is the maximum residency permit) and this will be renewed annually. You hold a long-term lease on an apartment in Country X. You travel to the project site every second week. You are engaged on a rotation basis comprised of Y weeks work and Z weeks vacation anywhere in the world. You travelled to Australia for holidays a number of timesr times during 2012. You have worked overseas for many years; however, prior to your work contract in Country X, you did not work during 200W and resided in Australia. You own a house in Australia which is where you stay when you are in Australia. This house is not rented as you store personal possessions there. You have an Australian bank account. You have an account in an Australian industry superannuation fund. You have two bank accounts in Country X. You hold two local visa cards in Country X. You have established ties with Country X, including being a formal member of a private club, a dining club, and a former students association. You are also an integral part of a support society in Country X and have inaugurated private sponsorship of an orphanage. You have your mail redirected to your offices in Country X.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 995-1(1). | Income Tax Assessment Act 1936 Subsection 6(1). | Income Tax Assessment Act 1997 Section 6-5

Reasons for decision: Detailed Reasoning - Residency for tax purposes: Section 995-1 of the ITAA 1997 defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. The terms 'resident' and 'resident of Australia', in regard to an individual, are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are: 1. The 'resides' test 2. The 'domicile' and 'permanent place of abode' tests 3. The '183 day' test 4. The 'superannuation' test. The first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - Permanent Place of Abode outside Australia . 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 a resident of Australia for tax purposes if they meet 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'. You are currently residing in Country X as evidenced by: · Your long-term lease on an Apartment; · You are not on the Australian electoral roll; · Working full-time; and · Your work contract is until early 2016. Therefore, you are not considered to be residing in Australia according to the ordinary meaning of the word 'reside'. | Detailed Reasoning - The 'domicile' test: Under this test, a person whose 'domicile' is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner of Taxation is satisfied the person's 'permanent place of abode' is outside Australia. A person's 'domicile' is generally their country of birth. This is known as a person's 'domicile of origin'. A person's 'domicile of origin' will not usually change but can in some circumstances. For example, a person can acquire a 'domicile' in another country by choice. In order to acquire a 'domicile' by choice outside their domicile of origin, a person must have an intention to make their home indefinitely in a country outside their 'domicile of origin'. Permanent place of abode Taxation Ruling IT 2650 outlines the Commissioner of Taxation's view on the application of the term 'permanent place of abode'. This view is considered through discussions on the decisions in FC of T v Applegate 79 ATC 4307; (1979) 9 ATR 899 and FC of T v Jenkins 82 ATC 4098; (1982) 12 ATR 745. The Ruling concludes that a person's 'permanent place of abode' cannot be ascertained by the application of any hard and fast rules, it is a question of fact to be determined in the light of all the circumstances of each case. · The intended and actual length of stay in the overseas country; · Any intention either to return to Australia at some definite point in time or to travel to another country; · The establishment of a home outside Australia; · The abandonment of any residence or place of abode the individual may have had in Australia; · The duration and continuity of the individual's presence in the overseas country; and · The durability of association that the individual has with a particular place in Australia. The weight given to each factor will vary with individual circumstances and no single factor is conclusive. A 'permanent place of abode' does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a 'permanent place of abode' elsewhere. In your case, · You have advised that you have a long-term lease on an apartment in Country X; · You maintain an association with Australia through your investments; · You will be residing in Country X until the end of your work contract; · You are working full-time; and · You have created social ties in Country X. Therefore you are not considered to have maintained your Australia 'domicile'. Based on these facts, the Commissioner of Taxation is satisfied that you have established a 'permanent place of abode' in Country X. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days during an income year, the person will be a resident of Australia for taxation purposes 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. This test does not apply to you as it has been identified that your 'permanent place of abode' is overseas. | Detailed Reasoning - The superannuation test: Under this test, an individual will be considered a resident of Australia for taxation purposes if: 1. they are a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990 , 2. they are an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976 , or 3. they are the spouse or a child under 16 of a person who is a member of the PSS or an eligible employee in respect of the CSS. You will not be treated as a resident under this test as you are not a member of the PSS or the CSS, a spouse of such a person, or a child under 16 of such a person. | Detailed Reasoning - Your residency status: As you are not considered to be a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not considered to be an Australian resident from the date of your departure from Australia under subsection 995-1(1) of the ITAA 1997.