Private ruling: residency
Published: August 2012
Ruling period: Year ended 30 June 2013

Ruling: Q1: Are you a resident of Australia for income tax purposes for the year ended 30 June 2013? | A1: No.

Relevant facts and circumstances: You are Australian citizen. You were employed by a state Government in 2002. You worked continuously for the a state Government while living in various rental dwellings in that state. You currently maintain your parents' address as your Australian residential address. You were issued a temporary work visa for Country A commencing 2010 with an expiry date of June 2012. In July 2010 you commenced paid leave with the state Government. In late July 2010 you relocated to Country A. It was not your intention at this time to relocate indefinitely. After staying with friends for the entire period since arriving, you commenced living in rented dwellings late 2010. In late 2010 you exhausted the majority of the paid leave from the state Government and commenced 12 months unpaid leave. In 2011 you commenced working at an Australian Government branch in Country A as locally engaged staff. In January 2012, your 12 months unpaid leave from the state Government expired and you resigned. In 2012 you took annual and unpaid leave from the Australian Government in Country A to return to Australia (for three weeks) to lodge for a subsequent temporary work visa. During this period you continued to have a residential address in Country A. In late June 2012 you were issued with an additional temporary work visa which commences on 1 July 2012 and expires on or after 1 July 2013. You are booked to depart Australia for Country A on or after 1 July 2012. You do not envisage returning to Australia for approximately one to two years. In July 2013 you may or may not apply to extend the visa and remain in Country A indefinitely. You hold shares in Australia and have maintained bank accounts in Australia. You maintain a bank account in the Country A. You have not made any capital investments in the Country A.

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

Reasons for decision: Summary: Subsection 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 purpose of the Income Tax Assessment Act 1936 (ITAA 1936). A foreign resident is a person who is not a resident of Australia. 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 an Australian resident for income tax purposes. These tests are: · the reside test · the domicile test · the 183 day test · the superannuation test. The first two tests are examined in detail in Taxation Ruling IT 2650. | Detailed Reasoning - The resides 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 an Australian resident for tax purposes if they meet the conditions of one of the other three tests. In your case you have been residing overseas since July 2010, therefore you are not considered to be residing in Australia under this test. | Detailed Reasoning - 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. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. 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: You left Australia over three years ago You have been employed with the Australian Government in Country A since 2011 You may extend your visa and remain in Country A indefinitely Therefore, you are considered to have established a permanent or long-term abode outside of Australia. | Detailed Reasoning - The 183-day test: Under this test, if you are actually present in Australia for more than half the income year, whether continuously or intermittently, you may be said to have a constructive residence in Australia unless it can be established that your usual place of abode is outside Australia and you have no intention to take up residence here. You will not be present in Australia for more than 183 days continuously or intermittently during the year ended 30 June 2013. Thus, you will not be a resident under this test. | 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 considered to be a member of the PSS or the CSS or a spouse of such a person, or a child under 16 of such a person. Therefore, you will not be treated as a resident under this test. In your case, you are not considered to be a resident of Australia for income tax purposes under any of the four tests of residency outlined above. | Detailed Reasoning - Note: If you are a non (foreign) resident of Australia, you only need to lodge a tax return if you have income that is sourced and taxable in Australia. This excludes any income from which non-resident withholding tax has been deducted. Examples of income that may be subject to non-resident withholding tax are bank interest and unfranked dividends.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.