Private ruling: International - residency
Published: April 2013
Ruling period: 1 July 2011 to 30 June 2012

Ruling: Questions and answers | Are you a resident of Australian for taxation purposes? | 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. Your country of origin is Country Z. You are a citizen of Country Z. You are unmarried and your family reside permanently in Country Z. You have assets in Country Z. You were a 457 temporary visa holder. You have lodged income tax returns as a resident of Australia for taxation purposes. You were a Commonwealth Government of Australia employee. You were a member of an Australian super fund. You took leave without pay from your employer to travel to Country Z to take care of family members and you will be living with them. At this time you sold/disposed of furnishings and vehicles. You relinquished control of your rented premises. You retained a bank account in Australia. You maintain connections with your colleagues and friends. You remain a member of professional associations. You completed all exams to become a member of the professional associations and maintain your continued professional development requirements to remain a member. You lodged, offshore, an Australian permanent residency application. You gained employment in Country Z and had a 12 month contract which can be extended based on yearly appraisal. You returned to Australia on occasions during the financial year to visit friends, organise income tax return matters and co-ordinate the finalisation of your employment, these periods were for X days the first time and Y days the second time; Owing to conditions of sponsorship of 457 Temporary visas you were unable to continue to be on leave without pay for an indefinite period. You resigned from your employment. You again left Australia. Your application for permanent residency in Australia was granted. You returned to Australia to activate the Permanent Residency Visa 175. You again left Australia. Your return to Australia is dependant on the health of your family members. You lodged an income tax return in Country Z which shows you as a non-resident.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 9(1) | Income Tax Assessment Act 1997 Section 6-5

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non resident of Australia for taxation purposes, your assessable income includes only income from an Australian source. | Detailed Reasoning - Are you an Australian resident for tax purposes?: 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 an Australian resident for income tax purposes. 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 an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | Detailed Reasoning - 1. The resides test: The ordinary meaning of the word reside, according to the dictionary definition, is to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place. For a number of months of the financial year you were residing outside of Australia and had no set plans to return to Australia permanently in the near future, you are not considered to be residing in Australia for this period. | Detailed Reasoning - 2. The domicile test: If a person has 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. | Detailed Reasoning - Domicile: Generally speaking, persons leaving Australia temporarily would be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice by operation of law. In order to show that a new domicile of choice in a country outside of Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. In your case, Australia is you domicile of choice, you have advised the length of time you will remain in Country Z is dependant on the health of you parents. You have not stated that you will not return to Australia and have been granted a Permanent Residency Visa 175 in Australia. Accordingly, you have maintained your Australian domicile. | Detailed Reasoning - Permanent place of abode: 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 persons 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. You left Australia to live with your parents and your stay in Country Z is dependant on their health. The Commissioner is not satisfied that you have established a permanent place of abode outside of Australia and therefore you are a resident of Australia under the domicile test. 3. The 183 day test When 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 have not been present in Australia for 183 days during the financial year. Consequently, you are not a resident under 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 were a member of the PSS or CSS as you were employed by the Commonwealth of Australia. However, you are no longer employed by the Commonwealth of Australia and consequently you will not be a resident under this test. | Detailed Reasoning - Your resident status: You are an Australian resident, under the tests of residency outlined in subsection 6(1) of the ITAA 1936, for the financial year.