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

Ruling: Question and answer: | Are you an Australian resident from the date you departed Australia? | No.

Relevant facts and circumstances: You are a citizen of Australia and Australia is your country of origin. Your parents are originally from country X and Australian permanent residents. They live and work in Australia. In the 2011-12 financial year you resigned from your employment and left Australia to go to country X to prepare your wedding and marry your partner. You applied for a spouse visa and you are now a temporary resident in country X. You have been living in country X with your spouse and his family since you left Australia. Your spouse works in country X and plans on building a career there first before you move to Australia permanently. You travel to Australia once or twice per year to visit your family. You work for an Australian government department in country X as a locally engaged employee. You are not a permanent employee of the Commonwealth for the purposes of the Public Sector Superannuation Scheme (PSS) membership or any other purpose under section 3 of the Superannuation Act 1990.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 995-1(1) | Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1936 Sub-subparagraph 6(1)(a)(iii)(A) | Superannuation Act 1990 Section 3 | Superannuation Act 1990 Section 6 | Superannuation Act 1990 Subsection 6(1) | Superannuation Act 1990 Subsection 6(4)

Reasons for decision: Detailed Reasoning - Residency: Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as 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 you are a resident of Australia. These tests are: · the residence according to ordinary concepts test · the domicile/permanent place of abode test, · the 183 day test/usual place of abode test, and · the Commonwealth superannuation test. · If any one of these tests is met, you will be a resident of Australia. The resides test is the primary test for determining your residency status. If residency is established under this test, the remaining three do not need to be considered. If residency is not established under the resides test, you will still be a resident of Australia if you meet the conditions of one of the other three tests. | Detailed Reasoning - Residence according to ordinary concepts: This test considers whether you are residing in Australia according to the ordinary meaning of the word 'reside'. The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01 defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'. There have been several court cases where residence according to ordinary concepts has been examined in detail. Overall it has been established that residence includes two elements: physical presence in a particular place and the intention to treat the place as home, at least for the time being, not necessarily forever. Taxation Ruling IT 2650 Income tax: residence - permanent place of abode outside Australia (which contains the Australian Taxation Office (ATO) view on whether an individual who temporarily leaves Australia ceases to be Australian resident) specifies that a person's place of abode is where they live. You resigned from your employment in the 2011-12 financial year and went to country X to prepare to marry your partner. You applied for a spouse visa and you are now a temporary resident in country X. You have been living in country X since you left Australia. Your spouse works in country X and plans on building a career there first before you move to Australia permanently. You do not have a specific date that you will return to Australia to live; you estimate it will be between two and five years' time. You return to Australia once or twice per year to visit your family. During the 2012-13 financial year you became permanently employed by an Australian government department in country X as a locally engaged employee. As you are living and working overseas, this is where you are residing. Accordingly, you have not been a resident of Australia under this test since you departed. | Detailed Reasoning - The domicile/permanent place of abode test: Under this test, if your domicile is in Australia you will be a resident of Australia, unless the Commissioner is satisfied that your permanent place of abode is outside Australia. Your domicile is generally your country of birth. This is known as your domicile of origin. Your domicile of origin will not usually change but can in some circumstances. For example, you can acquire a domicile in another country by choice, by applying for citizenship in that country. IT 2650 specifies that a person with an Australian domicile who is living outside Australia will retain their Australian domicile if they intend to return to Australia on a 'clearly foreseen and reasonably anticipated contingency'; at the end of a specific period of time for example. You are an Australian citizen and your domicile of origin is Australia. You have applied for and received a spouse visa which makes you a temporary resident of country X. However, as you are still a citizen of Australia, you have maintained your Australian domicile while you have been living and working overseas. As a result, you will be a resident of Australia under this test unless the Commissioner is satisfied your permanent place of abode is outside Australia. IT 2650 specifies that a permanent place of abode does not have to be everlasting or forever and does not mean an abode in which a person intends to live for the rest of their lives. IT 2650 also specifies that a period of two or more years is generally considered sufficient to support the establishment of a permanent place of abode outside of Australia and that an intention to return to live in Australia permanently does not prevent a taxpayer having a permanent place of abode elsewhere in the meantime. You have a permanent place of abode outside Australia because: you will have been living overseas since you left Australian and you have only returned to Australia for short visits to your family; you have gained permanent employment overseas; you have an established place to live with your spouse's family; your spouse is working in country X and intends on building s career there first before you come back to Australia; and you do not have a definite date that you will return to Australia; it will not be for at least two to five years. You have retained your Australian domicile but you have a permanent place of abode outside Australia. As a result, you are not a resident of Australia under this test. The 183 day/usual place of abode Where you are present in Australia for 183 days during a financial year, you will be a resident of Australia unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia. You have been living overseas since you left in August 2011 and you have only returned for short visits. Based on this, and the fact that you have a permanent place of abode outside Australia, you are not a resident of Australia under this test. The Commonwealth superannuation test Under this test, you will be a resident of Australia for taxation purposes if: · you are a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990 , · you are an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976 , or · you 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 do not satisfy any of these criteria; you are not a resident of Australia under this test. | Detailed Reasoning - Conclusion: You do not satisfy any of the four tests of Australian residency as outlined in section 6(1) of the ITAA 1936. Therefore you have not been a resident of Australia since you left to live in country X in August 2011.