Private ruling: Residency
Published: December 2011
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2013 | Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer: | Are you a resident of Australia for taxation purposes? | Yes.


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

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) advises 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. Subsection 995-1(1) of the 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: o the resides test o the domicile test o the 183 day test o the superannuation test The first two tests are examined in detail in Taxation Ruling IT 2650: Residency - Permanent Place of Abode outside Australia . 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 Macquarie Dictionary, 2001, rev. 3rd 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'. You left Australia to work overseas. You are therefore not residing in Australia according to ordinary concepts and you are not a resident of Australia for tax purposes according to this test. | Detailed Reasoning - 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: There are essentially 3 types of domicile that an individual can have: · the domicile of origin; · the domicile of choice; and · The domicile of dependency. Basically, the domicile of origin of an individual is where the individual was born. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. In relation to domicile of dependency, such a domicile will normally only exist in relation to minors or individuals who are of unsound mind. In your case, you were born in Australia; therefore, your domicile of origin is Australia. You intend to remain overseas for the duration of your work contract; you do not have permanent residency or citizenship of the overseas country. Therefore, you have not proven an intention to make the overseas country your home indefinitely and your domicile remains Australia. As your domicile is Australia, you will be a resident of Australia for tax purposes unless the Commissioner is satisfied that you have a permanent place of abode outside of Australia. | 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 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. An individual who establishes his or her home (in the sense of a dwelling place; a house or other shelter that is the fixed residence of a person, family or household) in an overseas country would tend to show that the place of abode in the overseas country is permanent. On the other hand individuals or families who make do with temporary accommodation with limited resources and facilities such as in barracks, on oil rigs, in single quarters, on ships or in mining towns are less likely to be able to show the establishment of a permanent place of abode. In your case: · You left Australia to work overseas · You have employer provided accommodation · You will return to Australia on your time off · You have a home to return to each time you come back to Australia · Your spouse remains in Australia · Commissioner is not satisfied that you have established a permanent place of abode outside Australia therefore you are a resident under this test. · As you meet the domicile test it is not necessary to consider the 183 day and superannuation tests. · Your residency status · You are a resident of Australia for taxation purposes under the domicile test. · You are required to declare all your income both in Australia and outside Australia in your tax returns.

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 and are a citizen of Australia. | You have accepted a work contract overseas. | The contract is for a number of months and there is an option to extend it. | You intend to return to Australia at the end of the contract. | You will work a number of weeks on and a number of weeks off and you will return to Australia for your weeks off. | No family members will accompany you overseas. | Your employer will provide on site accommodation in single quarters for you. | You have a house in Australia which you will return to as your spouse will remain living there. | You have no assets overseas. | You are the director of an Australian resident company. | You own a car and personal affects. | Neither you nor your spouse are currently or have ever been Commonwealth government employees.