Private ruling: Residency status
Published: August 2011
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you a resident of Australia for tax purposes for the duration of your employment in Country X? | A1: 

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 are a citizen of Australia. Australia is your country of origin. You are single and independent. You left Australia for Country X on date A. The purpose of your visit to Country X is to teach. You are employed as a teacher in Country X and pay tax there. You intend to stay in Country X until date B when your five year contract is finished with the possibility of obtaining a new contract. You plan to visit Australia less than once a year for a holiday and will live with your extended family. You will live in rented accommodation in Country X. You hold one asset in Australia which is a house which was your home but has become an investment property since your departure from Australia. You will not be moving back into the house when you return to Australia following the completion of your employment contract. You will live with family members. You will not own any assets in Country X apart from your clothing. Your social or sporting connections in Australia consist of family and friends. Your social or sporting connections in Country X will be friends and a sports club. You have never been a Commonwealth Government of Australia employee.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1). Income Tax Assessment Act 1997 Subsection 6-5(2). Income Tax Assessment Act 1997 Subsection 995-1(1).

Reasons for decision: Summary: Subsection 995-1(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). 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 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 satisfy the conditions of one of the three other tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word reside, according to the dictionary meaning, 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 will reside in Country X for at least five years, you will not be a resident of Australia 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 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. For the period date A until date B, you will not be an Australian resident for taxation purposes under the domicile test for the following reasons: · you are single and independent · you plan to live and work in Country X for five years which is a considerable time period · your employment contract may be extended beyond five years · you will live in rented accommodation · you will visit Australia less than once a year and stay with extended family · your only asset in Australia is a house · you have rented out your house and do not intend to move back into it on completion of your employment contract in Country X · you will create social ties in Country X by making friends and joining a sports club. As explained above, a permanent place of abode does not need to be everlasting. It is acknowledged that it is your intention to return to Australia on completion of your employment and to reside with family. Notwithstanding this, based on the facts above, you will not maintain your Australian domicile whilst working in Country X. You are independent and single. You intend to spend several years in Country X for employment purposes, and there is a possibility your employment may be extended. You will live in rented accommodation. You intend to join a sports club and plan to build up your social networks by making friends. Thus you will establish a permanent place of abode in Country X. Hence you will not be a resident of Australia under the domicile test. | Detailed Reasoning - The 183-day test: This test does not apply to you as it has been established that your usual place of abode from date A until date B will be in Country X. | 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. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS. This test does not apply to you as you are not eligible to contribute to the PSS or the CSS. Your residency status from date A until date B For the period date A until date B, as you will not be a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936, you will be a non-resident of Australia for taxation purposes for that period.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.