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

Ruling: Question and answer: | Are you a resident of Australia for income tax purposes? | No.


Relevant legislative provisions: Income Tax Assessment Act 1997, Subsection 995-1(1). | 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 · the superannuation test. The first two tests are examined in detail in Taxation Ruling IT 2650. 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 satisfy the conditions of one of the other three 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'. TAXATION RULING IT 2650: RESIDENCY - PERMANENT PLACE OF ABODE OUTSIDE AUSTRALIA, provide guidelines for determining whether individuals who leave Australia temporarily to live overseas, for example, on temporary overseas work assignments or on overseas study leave, cease to be Australian residents for income tax purposes during their overseas stay. The principles and guidelines adopted in IT 2650 can also be used for individuals who intend to reside overseas indefinitely. Paragraph 19 of IT 2650 states: The first question to be asked in considering the residency status of a person temporarily leaving Australia is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to go any further. The person is a resident of Australia for income tax purposes. In your case, you left Australia to live and work in an overseas country for an indefinite period. Due to visa restrictions you have been required to return to Australia to renew your visa, until you received a permanent visa. As you are living and working in an overseas country, it is considered that your place of abode is in that country. Accordingly, you are not considered to be residing in Australia and so are not a resident for taxation purposes under the 'resides 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. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. From the information that you have provided, you have not demonstrated an intention to become a citizen of the overseas country that you are working in and are still a citizen of Australia, therefore it is considered your domicile is unchanged. 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 you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere. Some of the factors which have been considered relevant by the Courts, Boards of Review and Administrative Appeals Tribunal and which are used by the ATO in reaching a state of satisfaction as to a taxpayer's permanent place of abode include: · the intended and actual length of the taxpayer's stay in the overseas country; · whether the taxpayer intended to stay in the overseas country only temporarily and then to move on to another country or to return to Australia at some definite point in time; · whether the taxpayer has established a home (in the sense of dwelling place; a house or other shelter that is the fixed residence of a person, a family, or a household), outside Australia; · whether any residence or place of abode exists in Australia or has been abandoned because of the overseas absence; · the duration and continuity of the taxpayer's presence in the overseas country; and · the durability of association that the person has with a particular place in Australia, i.e. maintaining bank accounts in Australia, informing government departments such as the Department of Social Security that he or she is leaving permanently and that family allowance payments should be stopped, place of education of the taxpayer's children, family ties and so on. In your case you: · have left Australia to work permanently in an overseas country; · have lived in the same overseas country since leaving Australia and have no intention of returning to Australia in the foreseeable future; · live in permanently assigned accommodation provided by your overseas employer; · have moved the majority of you personal belongings overseas and when you are required to travel they have remained overseas; · have been required to return to Australia on a number of occasions to renew your overseas visa and on occasion for short term employment assignments; · do not own have a residence in Australia, and stay with your parents when you return to Australia; · have no dependants; · do not have any sporting ties in Australia and your only social ties are those with your family and high school friends; · do not have any sporting ties overseas and your only social ties are friendships that you have formed with work colleagues; On the balance and based on the above, the Commissioner is satisfied that you have a permanent place of abode outside of Australia and so considers that you are not a resident for taxation purposes under the domicile test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for more than183 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. You were not in Australia for a period greater than 183 days during the financial years you have requested in this ruling, therefore you are not considered to be a resident of Australia for income tax purposes under this test. Accordingly, you are not a resident of Australia for income tax purposes under 'The 183-day test'. | Detailed Reasoning - The Superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS. As you are over the age of 16 years and have not, or have you ever been a member of a CSS or PSS you are not considered to be a resident of Australia under this test. Accordingly, you are not a resident of Australia under 'The Superannuation Test'. | Detailed Reasoning - Your residency status: As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not an Australian resident for income tax purposes.

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. | Relevant facts: You were born in Australia and are an Australian citizen. | You are single with no dependents. | You are employed with the international company. | You departed Australia to work predominately in an overseas country. | Although primarily based in an overseas country, you were also required to undertake work in other overseas countries including Australia. | You intended to obtain a permanent working visa the country that you are based in, however due to the nature of visa allocation by the local government you unable to receive one until one became available. As a result you were required to return to Australia on a number of occasions to renew your work visa. | For the initial period overseas you held a short term multiple entry visa's that allowed you to work overseas. However after a period you have obtained a permanent working visa that allowed you to work in the overseas country for an extended period. | For the financial years that you requested in this ruling you were in Australia for less than 183 days in each year. | When you return to Australia you stay at your parent's residence. | While overseas your employer has assigned you with a villa as part of your employment contract. The villa is permanently assigned to you, and when you are away remains vacant. | You have transported most of your personal possessions to your overseas villa. | Your assets that you hold in Australia are; | · a small number of jointly owned Australian listed shares; and | · a small jointly owned savings account. | Your assets that you hold overseas are; | · a offshore bank account; | · an USD online share trading account; | · an online USD precious metals account; and | Your wages are paid into your offshore bank account. | You do not have any sporting ties in Australia and your only social ties are those with your family and high school friends. | You do not have any sporting ties overseas and your only social ties are friendships that you have formed with work colleagues. | You have never been a Commonwealth Government of Australia employee. | You intend to remain overseas indefinitely.