Private ruling: Residency
Published: March 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Question and answer | Are you a non resident of Australia for tax purposes? | Yes


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | 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, and · 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. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. Where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident if they meet the conditions of one of the other 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 live in the Country X with your spouse. When you are in Australia, you stay in mobile camps, hotels and motel accommodation. As you are only staying in temporary accommodation while working in Australia, and have a home overseas, you are not residing in Australia according to the ordinary meaning of the word reside. As you do not meet the resides test, we will need to consider whether you meet any of the other three tests of residency. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. Domicile is the place that is considered by law to be your permanent home. It is usually something more than a place of residence. Taxation Ruling IT 2650 Residency - permanent place of abode outside Australia provides that the common law test of domicile of choice has now been restated in section 10 of the Domicile Act which states that the intention that a person must have in order to acquire a domicile of choice in a country is the intention to make his home indefinitely in that country. In determining a person's domicile for the purposes of the definition of resident in subsection 6(1) of the ITAA 1997, it is necessary to consider the person's intention as to the country in which he or she is to make his or her home indefinitely. In your case, your domicile of origin is Australia, however, you have lived in the Country X since 19XX and do not intend to return to Australia. Therefore, you have given up your domicile of origin and now have a new domicile of choice which is the Country X. Therefore, as your domicile is not Australia, you are not a resident of Australia under this test. | Detailed Reasoning - The 183 day test: Where a person is present in Australia for more than 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. In your case, although you will be physically present in Australia for more than 183 days of the subsequent income year, the Commissioner is satisfied that you do not have a usual place of abode in Australia and you do not intend to take up residence in Australia. Therefore, you are not a resident of Australia under this test. | Detailed Reasoning - The superannuation test: A person will be considered a resident under the Commonwealth superannuation fund test if they currently contribute to certain superannuation funds for Commonwealth government employees. The eligible funds are funds: · established under the Superannuation Act 1976 (such as the Commonwealth Superannuation Scheme), or · established under the Superannuation Act 1990 (such as the Public Sector Superannuation Scheme), or · the spouse or child under 16 of a person covered by either of the above funds. As neither you, nor your spouse, are able to contribute to the abovementioned superannuation schemes, you are therefore not a resident of Australia under this test. | Detailed Reasoning - Conclusion: As you do not meet any of the above tests, you are not a resident of Australia for tax purposes. As you are not a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income only includes income gained from sources in Australia.

Relevant facts: You are an Australian citizen and have been a non-resident of Australia for taxation purposes for several decades. | You reside in the Country X with your spouse. All of your personal belongings are in the Country X. | Your spouse was granted permanent Australian residency several years ago but they are a non resident of Australia for tax purposes. | You do not have any dependant children. | You purchased an investment property in Australia several years ago and this is currently being renovated. Your adult children who live in Australia may reside in the property but you have no intention to live in the property. | You have no other assets in Australia and do not have any sporting or social ties with Australia. | You had an employment contract (with a non-resident employer) to work in Australia in the relevant financial year on a fly in/fly out arrangement to another part of Australia. | Your employer has offered you a contract which will not be a fly in/fly out arrangement. | The new contract will require you to travel throughout various mobile camps in the regional Australia and travel to urban Australia on occasions where your employer's office is located. | When you work in urban areas of Australia you live in temporary accommodation such as hotels and motels. | When you are not working (agreed leave) you will return to the Country X to be with your spouse and to live in your house. | Your spouse will travel to Australia on occasions to visit you if possible as they may come to Australia to help out with the renovations of your investment property. | You are not a member of the superannuation scheme established by deed under the Superannuation Act 1990 .