Private ruling: Residency
Published: July 2012
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2011

Ruling: Question and answer: | Are you a resident of Australia for taxation purposes from the date you departed Australia? | No.

Relevant facts and circumstances: You are a citizen of Australia and you have spent the majority of your life living in Australia. Your country of origin is Australia. You departed Australia during the relevant financial year to commence work in country X. You hold a foreign country visa which is renewed by your employer every 12 months. You work in country X. Your employer is based in country X. You live in country X with your partner and have done so since you departed Australia. Your partner is a citizen of country X. You plan to remain overseas for a minimum of Y years, possibly permanently. You have been back to Australia for a total of Z days since leaving to pack up your remaining items and to catch up with friends. As part of your work contract you have been given four weeks annual leave and you will be receiving a travel allowance. This allowance may be used to travel anywhere in the world including Australia. It is your choice where you choose to travel and it is your choice whether you choose to cash out your travel allowance. You currently live in a rental property situated in country X. You have no assets overseas at this stage but you intend to purchase a car at a later date. The only asset you have in Australia is your car which you intend to sell when you next visit Australia. A date has not yet been set for your return visit. You also hold a bank account and credit card in Australia, neither account earns any interest income. You have an employment contract in country X which is renewed on a 12 monthly basis. You pay tax in country X on your contract income. You have no direct family ties in Australia. You have no social or sporting connections in Australia. You have no sporting connections in country X. Neither you nor your spouse have ever been Commonwealth Government of Australia employees.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision: Detailed Reasoning - Residency Status: The terms resident and resident of Australia, with regard to an individual, are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The definition provides four tests which will help us ascertain whether you are a resident of Australia for income tax purposes. These tests are: (i) residence according to ordinary concepts; (ii) the domicile/permanent place of abode test; (iii) the 183 day/usual place of abode test; and (iv) the Commonwealth superannuation test. The primary test for deciding your residency status is whether you reside in Australia according to the ordinary meaning of the word resides. However, where you do not reside in Australia according to ordinary concepts, you may still be considered to be a resident of Australia for tax purposes if you satisfy the conditions of one of the other three tests. | Detailed Reasoning - Residence according to ordinary concepts: 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'. As you have been living in country X since leaving Australia to commence your employment contract, you are not a resident of Australia for tax purposes under this test from when you left Australia. | Detailed Reasoning - The domicile/permanent place of abode test: If a person has their domicile in Australia they will continue to be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. There are essentially 3 types of domicile that an individual can have: - the domicile of origin; - the domicile of choice; and - the domicile of dependency. Basically, your domicile of origin is the where you were born. A domicile of choice is attained by demonstrating that you have chosen a new country, other than your country of origin, to be your home. You must be able prove an intention to make your home indefinitely in that country, for example, by applying for permanent residency. In relation to domicile of dependency, such a domicile will normally only exist in relation to minors or individuals who are of unsound mind. Your country of origin is Australia, you are a citizen of Australia and you have spent the majority of your life living here. Taxation Ruling IT 2650 Income tax: residency - permanent place of abode outside Australia advises that in determining a person's domicile 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. The ruling explains that a person with an Australian domicile but living outside Australia will retain that domicile if he or she intends to return to Australia on a clearly foreseen and planned period of time, for example, at the end of his or her employment contract. On the other hand, if that person has in mind only a vague possibility of returning to Australia at some future point in time that is not so clearly defined, it would be seen to be consistent with the intention required by law to acquire a domicile of choice in the foreign country. In accordance with the guidelines provided by IT 2650 as outlined above, you have stated that you intend to remain overseas for a minimum of Y years and will possibly stay there permanently. You have chosen a new domicile of choice in country X and you have established a permanent place of abode outside Australia. Accordingly, you are not a resident of Australia under the domicile/permanent place of abode test from when you left Australia. | Detailed Reasoning - The 183-day test: Where you are present in Australia for 183 days during the year of income you will be a resident, 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 do not satisfy this test as you have established a permanent place of abode outside of Australia. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Commonwealth Superannuation Scheme (CSS) or Public Service Superannuation Scheme (PSS), or that person is the spouse or child under 16 of such a person. In your case, neither you nor your spouse, have ever been members of the CSS or the PSS, or a child under 16 of such a person. Therefore, you are not a resident under this test. | Detailed Reasoning - Your residency status: For the reasons outlined above you are not a resident of Australia for tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 from when you departed 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.