Private ruling: Residency status
Published: October 2011
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? | Yes.


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 overseas for an extended period. As you are living and working overseas your place of abode is overseas. Accordingly, you are not 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. In your case, as you are still a citizen of Australia, 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: · you intend to remain overseas until the full term of your contract, possibly longer; · have not lived in any given country for any extended period since the commencement of your contract; · you have moved from country to country spending less than 3 months in any country; · live in employer provided accommodation in the various counties during your overseas work assignment; · return to Australia for short periods then generally leave to begin a new overseas work assignment in different country; and · have one substantial asset overseas, being an overseas bank account. On the balance and based on the above, the Commissioner is not satisfied that you have established a permanent place of abode outside of Australia as the most time that you have lived in any given country that you have served is less than 3 months. Furthermore the pattern of your overseas work assignments is such that after you return to Australia you generally begin a new assign in a new country. Therefore you are an Australian resident for income tax purposes under the domicile test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for more than 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 were not in Australia for 183 days during the income years included in this ruling, therefore you are not a resident for taxation 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 are not a resident under this test as you are over the age of 16 years and have not, or have you ever been a member of a CSS or PSS. | Detailed Reasoning - Your residency status: As you are considered not to have established a permanent place of abode outside of Australia under the 'domicile test', you are considered to be an Australian resident for taxation purposes, under subsection 6(1) of the ITAA 1936.

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 signed an employment contract to work overseas for an extended period. | The contract required you to move to move overseas to an initial destination followed by another destination. | Your employment contract required you to travel to a number of different countries for short periods for work and training purposes. You move from country to country spending less than 3 months in any country. | While overseas you held various visa's for the countries that you worked in. | You generally return to Australia during your leave and stay family and friends. You have not been in Australia for more than 183 days in the ruling years. | Your employer provides you with accommodation in each of the locations that you work. | An investment property that you have recently placed a deposit on and that is yet to be built is the only substantial asset that you own in Australia. | The only substantial asset that you own overseas is an overseas bank account. | Your only ties to Australia are your family. | You have no sporting connections in Australia, however you do maintain some social connections with friends. | While working overseas you interact with other employees, however integration with the general community in the countries that you worked in is very difficult due to security concerns. | You have never been a Commonwealth Government of Australia employee. | You intend to remain overseas for the full contract term and possibly longer depending on circumstances at the time.