Private ruling: Residency status
Published: May 2015
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2015

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

Relevant facts and circumstances: You were born in Australia and are a citizen of Australia. You are single with a dependent child. You have accepted a two year employment contract with an international school in country Z. The contract contains a provision for an extension. In order to for fill you employment obligations, you will depart Australia and move to country Z. You will be accompanied by your dependent child who will enrol in a school in country Z. You will enter country Z on a multiple entry visa that is required to be renewed half yearly. Whilst employed in country Z you will live in a unit that will be provided by your employer. During the period that you will be employed in country Z, you intend to return to Australia to visit family and friends on two occasions for a maximum of 4 weeks. During these visits you will stay as a guest at your parent's home. Your assets in Australia consist of your family home that will become a rental property upon your departure. Prior to your departure your whitegoods and household furnishings will be disposed of. At present you own a parcel of shares, however you intend to dispose of your shares prior to your departure. Your personal effects for the most part will be transported to country Z with a small portion being stored in Australia. You have no social or sporting ties in Australia. You have limited social ties in country Z, however you envisage that on arrival you will develop these ties. You have never been an employee of the Commonwealth Government of Australia. Prior to your departure from Australia you will inform the Australian Electoral Commission and your financial institution (whom you have a mortgage with) that you will no longer be residing in Australia. Your country Z employer will pay income tax on your behalf. You intend to reside in country Z for the duration of your employment contract and possibly for a further number of years, depending on acceptance of a contract extension. Once you have completed your employment contract in country Z you intend to pursue further employment opportunities overseas.

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

Reasons for decision: Detailed Reasoning - Residency: Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes 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 a taxpayer is a resident of Australia for income tax purposes. The tests are: • the resides test, • the domicile (and permanent place of abode) test, • the 183 day test, and • the superannuation test. The first two tests are examined in detail in TAXATION RULING NO. IT 2650 INCOME TAX: Residency - Permanent Place Of Abode Outside Australia . The latter two tests are relatively self-explanatory as they require the individual to either be physically present in Australia for a period greater than 183 days or be eligible to contribute to the PSS or CSS superannuation schemes. An individual need only satisfy the conditions of one of the four tests to be deemed a resident of Australia for income tax purposes. | Detailed Reasoning - The resides test: The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. As the word 'reside' is not defined in Australian taxation law, it takes its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. In Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014) the Administrative Appeals Tribunal noted that the settled position of the courts (at ultimate appellant level) as to the meaning of the word resides in the ITAA 1936 is that the word: bears its ordinary English meaning, which 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". Based on the facts of your case, the Commissioner accepts that you will not be residing in Australia according to the ordinary meaning of the word once you depart Australia. | Detailed Reasoning - The domicile test: Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's permanent place of abode is outside Australia. In your case your domicile of origin is Australia and from the information you have provided you do not intend to become a citizen or permanent resident of country Z. Therefore your Australian domicile will remain unchanged. Although it has been determined that your Australian domicile will remained unchanged, the Commissioner is satisfied that based on the facts that you have provided you will established a permanent place of abode outside of Australia post your departure. Therefore you will not be a resident of Australia for income tax purposes under this test once you depart Australia. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 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 will not be physical present in Australia for a period of greater than 183 days in any of the income years included in this ruling. Therefore you will not be 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. You have never been a member of a CSS or PSS. Accordingly, you are not a resident under this test. | Detailed Reasoning - Your residency status: As you will not be 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 will not be considered to be an Australian resident for taxation purposes for the income years included in this ruling.