Private ruling: Residency status
Published: March 2012
Ruling period: Year ended 30 June 2010 | Year ended 30 June 2011 | Year ending 30 June 2012
Date scheme commenced: 1 July 2009

Ruling: Q2: Are the taxed and untaxed elements of your Australian government pension exempt from taxation in Australia? 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 receive an Australian Government pension that comprises of both taxed and untaxed components. You work for the Country B government. You pay taxes to Country B. You have permanent residency in Country B. You have been in Country B for quite a while. You rent a home in Country B. You are divorced. When you visit Australia, you stay at your parent's property. You own no property in Australia. You intend to stay for as long as you can in Country B whilst there is the work. Once the Country B work ceases, you have no clear intentions in regards to your permanent residency.

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

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. (1) Residency status: 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 a resident of Australia. These tests are: 1. the resides test 2. the domicile test 3. the 183 day test 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 - 1. The resides test: Taxation Ruling TR 98/17 explains that the resides test involves determining whether the taxpayer resides in Australia according to the ordinary meaning of the word resides. According to Macquarie Dictionary (Rev. 3 rd Edition) , the ordinary meaning of the word reside is to dwell permanently, or for a considerable time; have ones 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 ones settled or usual abode, to live in or at a particular place. You work and pay taxes in Country B. You are a permanent resident of Country B. You rent a property in Country B. You intend to stay in Country B as long as there is the work. You have no property in Australia. Subsequently, you are considered to be a foreign resident under this test. | 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. 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 rent a home in Country B. You work and pay taxes in Country B. You are a permanent resident of Country B. You intend to stay in Country B for as long as there is the work. You have no property in Australia. Based on these facts, it is therefore considered that you have established a permanent place of abode outside of Australia. | Detailed Reasoning - 3. The 183-day test: You have spent greater than 183 days residing outside of Australia and you may therefore be considered as a foreign resident for taxation purposes in accordance with this test. | Detailed Reasoning - 4. 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 contributing 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 are not a resident under this test. | Detailed Reasoning - Your residency status: The determination of a persons residency status depends on that person's circumstance and based upon the information provided, you are considered to be a foreign resident for taxation purposes. (2) The Australian Government pension: In accordance with the Country B Agreement an Australian Government pension paid to a resident of Country B will be taxable only in Country B. Accordingly, the pension will be exempt from taxation in Australia.

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. | Question 1: Are you a resident of Australia for taxation purposes? | Reasons for decision: These reasons for decision accompany the Notice of private ruling .