Private ruling: Residency
Published: February 2013
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer: | Were you a resident of Australia for income tax purposes from the time you left Australia in relevant year? | No.

Relevant facts and circumstances: You were born in Australia and are an Australian citizen. You have a spouse and children. You and your family spent a number of years in country X while your spouse undertook career related training. You and your family returned to Australia in the relevant year. After your return your children attended school and your spouse looked for employment. Your spouse spent a number of months unsuccessfully looking for employment before obtaining a permanent position in country X. You and your family left Australia for country X in the relevant year and you are still in that country. You are not currently employed. You expect to return to Australia as soon as your spouse obtains employment in Australia. Your assets in Australia include a residential house, investment properties, superannuation fund and bank accounts. Neither you nor your spouse is employed by the Australian Commonwealth government.


Reasons for decision: Summary: Generally 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 within the tax provisions. 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 test, 3. the 183 day test, and 4. the superannuation test. 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 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. 5 th edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; have 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'. In your case, from the relevant year you were living with your family in Australia, your children attended school and your spouse was looking for employment. You and your family subsequently left Australia for country X as your spouse had obtained an employment position in that country. You lived with your family in country X while your spouse carried out their employment duties. Based on the above, during the subsequent income tax year you were residing in Australia according to the ordinary meaning of the word until you left Australia for country X. However, you were not residing in Australia and did not meet 'the resides' test from the time you left Australia. You were not a resident of Australia under 'the resides' test from the time you left Australia in the relevant year. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for income tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. | Detailed Reasoning - Domicile: Your domicile is Australia as your country of origin is Australia and you are an Australian citizen. | Detailed Reasoning - Permanent place of abode: 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 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, although you had stronger financial ties to Australia than country X, you established a home and lived with your family in country X while your spouse carried out their employment duties. Country X was to be your home until you returned to Australia at some point in the future. Therefore, the Commissioner is satisfied that you established a permanent place of abode outside Australia from the time you left Australia for country X. You were not a resident of Australia under this test from late in the relevant year. | Detailed Reasoning - The 183 day test: An individual may be considered to be an Australian resident for income tax purposes under this test if that person is present in Australia for 183 days or more in the relevant income year. You were not a resident under this test for the subsequent income tax year as you were not in Australia for more than 183 days in that year. | Detailed Reasoning - The superannuation test: An individual is considered to be an Australian resident for income tax purposes if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You were not a resident under this test for the relevant income tax year as neither you nor your spouse was employed by the Australian Commonwealth government in that year. | Detailed Reasoning - Your residency status: For the income tax year ending 30 June 20XX you were a resident of Australia for tax purposes from 1 July 20YY until you left Australia for country X. You were a foreign resident from late in the relevant year.

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