Private ruling: Residency
Published: July 2013
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: On or after 1 January 2012

Ruling: Question and answer | 1. Were you a resident of Australia for the relevant years whilst you lived and worked in Country Y? | Yes. | 2. Will you be a resident of Australia for the subsequent year? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You migrated to Australia from County X in 200X. You are a permanent resident of Australia. Prior to taking up the international employment contract you lived in a rental property with your family. Your family accompanied you to Country Y and your children attended school in Country Y. You and your family live in rented accommodation. Your employer provided an allowance to cover your accommodation costs, children's education and 'home trip' airfares so that you could return to Australia over your annual leave. You were employed under two different contracts for the period in question, the second of which you are currently working under. The first contract was with XXX where you were to carry out a short term assignment in County Y as an operations manager. This contract commencement date was early in the relevant year and for a period of 12 months. You arrived in Country Y early in the relevant year and started work shortly after. You were being paid by the Australian payroll into your Australian bank account. Your relocation was paid for and you received a number of allowances. Your employer deducted PAYG from your pay as if you carried out your employment in Australia. Late the relevant year you received a redundancy letter due to the merger of your employer and another organisation. You then received a new contract with YYY, this is a Country Y company, and your contract was for a number of months period from early in the subsequent year to mid in the subsequent year, with an extension available until mid 20XX. You were paid in YYY from the local Country Y payroll. You maintained your Australian bank accounts whilst you worked in Country Y. You have opened a Country Y bank account to facilitate the electronic payment of your income. You intend to return to Australia at the end of your current contract. You did not take many personal belongings with you overseas. You only took personal clothing and small items such as a laptop, iPad, camera and some books. You do not have a permanent place to live overseas, you are renting a furnished apartment and your employer provides an allowance to cover this. You do not have any assets overseas. You are not a member of the PSS or CSS or a spouse of such a person, or a child under 16 of such a person.

Relevant legislative provisions: Section 6-5 of the Income Tax Assessment Act 1997 | Section 6(1) of the Income Tax Assessment Act 1936

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non resident of Australia for taxation purposes, your assessable income includes only income from an Australian source. | Detailed Reasoning - Are you an Australian resident for tax purposes?: 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 an Australian resident for income tax purposes. These tests are: 1. The resides test 2. The domicile test 3. The 183 day test 4. The superannuation test You only need to satisfy the criteria of one of these tests to be a resident of Australia. | Detailed Reasoning - 1. The resides test: The ordinary meaning of the word reside, according to the dictionary definition, 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. As you have been found to be a resident of Australia under the Domicile test below, this test will not be considered. | Detailed Reasoning - 2. 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. | Detailed Reasoning - Domicile: Generally speaking, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice by operation of law. In order to show that a new domicile of choice in a country outside of Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. In your case, you have advised that you intend to return to Australia at the conclusion of your current contract. You have retained your Australian domicile. Therefore you will be an Australian resident under this test unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia. | 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. IT 2650 outlines the elements to be considered when determining whether a person has established a permanent place of abode outside of Australia. The ruling states that all of the circumstances of each case need to be considered and not one factor is determinative. Factors to be considered include: (a) Intended and actual stay overseas (b) Intention to stay in one country or move between countries (c) Whether a home has been established outside of Australia (d) The duration and continuity of presence overseas (e) The durability of association with Australia IT2650 also provides the following examples: 34. A bank officer was posted from Australia to the New Hebrides for 2 years only and never intended to stay any longer. During his overseas posting he maintained bank accounts in Australia, into one of which family allowance payments continued to be made, and let his Australian home unfurnished. He was accompanied by his wife and children. His place of abode in the New Hebrides was considered to be temporary or transitory for two reasons. Firstly, he lived, by the bank's continuing permission, in a house leased by the bank in the New Hebrides. Secondly, having regard to the 2- year period of his appointment, the taxpayer's relationship with his place of abode in Port Vila lacked " a more enduring relationship" (see Applegate per Fisher J 79 ATC at p.4317; 9 ATR at pp 910-911) with the particular place of abode than that expected to exist where a person ordinarily resides there or has there his usual place of abode (Case Q68 83 ATC 343; Case 132 26 CTBR(NS) 913). | Detailed Reasoning - Result : resident.: 38. An airline company employee took a 2 to 3 year posting to an overseas country expecting to return to Australia at the end of that period. She was accompanied by her spouse and children and purchased a home in the overseas country while renting out the family home in Australia. She was considered to have remained a resident of Australia. However, if she decided to stay in the overseas country for a further period of, say, 2 years, she was to be treated as a non-resident during the additional 2 year period. | Detailed Reasoning - Result: resident during her posting.: You moved to Country Y originally to take up a short term contract with your Australian employer. You received a redundancy from this employer when they merged with another company. You signed a new employment contract which was for 6 months with the option to extend for a further 12 months, you have taken up this option and now intend to return to Australia after mid 20XX when your contract ends. You are living with your family in rental accommodation which is paid for by your employer in the form of an allowance. Both employment contracts provided you with an allowance to cover 'home trip' airfares so that you are able to return to Australia during your annual leave breaks. You and your family intend to return to Australia in for holidays in the relevant year and also in 20XX. You have maintained your bank accounts in Australia and for the period of your first employment contract you were being paid into your Australian bank account. Your continued association with Australia is supported by your 'home trip' allowance in your contracts which enabled you and your family to return home to Australia during your annual leave breaks. Your association with Country Y is centred on your employment, when your employment contract ends you intend to return to Australia with your family. You have been and will remain in Country Y for short period of time as in the examples provided above your place of abode is temporary whilst you carry out your employment contact. The Commissioner is not satisfied that you have established a permanent place of abode outside of Australia therefore you are a resident under the domicile test. | Detailed Reasoning - The 183 day test: When 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 do not satisfy this test as you have not and do not intend to spend more than183 days in each financial year in Australia during the period of this ruling. | Detailed Reasoning - The Superannuation test: An individual is still considered to be a resident 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 are not a member of the PSS or CSS or a spouse of such a person, or a child under 16 of such a person. Therefore, you are not a resident under this test. | Detailed Reasoning - Your residency status: You are a resident of Australia under the domicile test.