Private ruling: Residency - leaving Australia
Published: June 2014
Ruling period: 1 July 20XX to 30 June 20YY.
Date scheme commenced: 1 July 20XX.

Ruling: Question and answer: | Will you be a resident of Australia for taxation purposes from the time you left Australia in 20XX until 30 June 20YY? | No.

Relevant facts and circumstances: You were born in another country and you are a citizen of that county. You moved to Australia and also became an Australian citizen. You have a spouse and children (your family). Your family also have dual citizenship with Australia and the country you were born in. You left Australia in 20XX to work overseas. Your family left with you and have been with you ever since. You have no intention of living permanently in Australia in the future. When you first left Australia you and your family moved to Country A where you worked for about six months and resided in furnished accommodation which you paid for. You and your family then moved to country B where you are now working and living with your family. You reside in rented accommodation in Country B that has been furnished with your household belongings from Australia. You have an employment contract in Country B that could be extended until 30 June 20YY. Your children are attending school Country B. Since you left Australia the home that was previously occupied in Australia by you and your family has been rented out to third party tenants on a long term lease that is managed through an agent. You maintain a bank account in Australia for the purpose of dealing with expenses relating to rental property. You have advised various Australian government agencies that you and your family were leaving Australia indefinitely. You have a superannuation fund in Australia that has not been contributed to since you left Australia. You do not have private health insurance in Australia. You are not a member of any health, golf or other clubs in Australia. All your Australian mail is directed to your home address in Country B. You maintain bank accounts in Country B. In Country B you and your family are involved in various social activities. You have not and will not be in Australia for more that 183 days for any of the financial years to which this ruling relates. The Commonwealth superannuation test does not apply to you or your spouse.

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

Reasons for decision: Detailed Reasoning - Residency for taxation purposes: 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. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests. | 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 it's 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 have not resided in Australia according to the ordinary meaning of the word since you left in 20XX. | 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. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice. In order to acquire a new domicile by choice, a person must have an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person is granted permanent residency, or becomes a citizen of a country outside of their domicile of origin. Your domicile of origin was your country of birth but you obtained a domicile of choice in Australia when you became an Australian citizen. Accordingly, you will be a resident of Australia under this test unless the Commissioner is satisfied you have a permanent place of abode outside Australia. Taxation Ruling IT 2650 - Income tax: residency - permanent place of abode outside Australia specifies that a 'permanent place of abode' does not have to be everlasting or forever and does not mean an abode in which a person intends to live for the rest of their lives. In essence, Taxation Ruling IT 2650, specifies that a person's place of abode is where they live and is a question of fact to be determined in the light of all the factors a particular case Based on the facts of this case, the Commissioner is satisfied that after leaving Australia in 20XX you established a permanent place of abode overseas. Firstly in Country A and later in Country B where you are currently residing. Accordingly, and provided your circumstances do not change, you will not be a resident of Australia under this test from the time you left Australia in 20XX until 30 June 20YY. | Detailed Reasoning - The 183-day test: Under this test, a person who is in Australia for 183 days (not necessarily consecutively) during an income year may be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You have stated that you have not been and will not be in Australia for more than 183 days in any of the financial years to which this ruling relates. As a result, and based on the facts you have provided, you will not be a resident of Australia for taxation purposes under this test between the time you left Australia in 20XX until 30 June 20YY. | Detailed Reasoning - The superannuation test: You have stated the Commonwealth superannuation test does not apply to you. | Detailed Reasoning - Conclusion - your residency status: Based on the facts you have provided, you will not satisfy any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 between the time you left Australia in 20XX and 30 June 20YY and you will not be a resident of Australia for taxation purposes during that time.