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

Ruling: Question and Answer: | Will you be a resident of Australia for tax purposes for the duration of your employment in Country X? | No

Relevant facts and circumstances: You are an Australian citizen. Australia is your country of origin. You intend to take up a position in Country X. You plan to leave Australia on date A. Your spouse will accompany you. You intend to take a five year contract returning to Australia for your annual leave. You intend to return to Australia on a permanent basis on date B. Your employment contract may be further extended. You will live in rental accommodation supplied by your employer. You intend to maintain your principal place of residence in Australia where your non dependent children will reside with no rent payable. You will stay in your residence when you visit Australia. You plan to move back into your residence when you return to Australia. You have investment borrowings against your home in addition to a margin lending loan with a corresponding managed fund investment. You hold an Australian superannuation account. You will not have any assets when living overseas apart from a bank account. You have social and sporting commitments in Australia. Your will have social and sporting commitments when in Country X. You and your spouse are not eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS),

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

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: 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 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 from date A until date B, you will not be an Australian resident for taxation purposes under the domicile test for the following reasons: · 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 · your spouse will accompany you and thus your emotional ties will be greater overseas than in Australia · you will live in fixed accommodation to be provided by your employer · you will continue your extracurricular interests in Country X · you plan to meet friends at gatherings and engage in sight seeing with your spouse and work colleagues · you will visit Australia for holiday purposes only during your annual leave each year. 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 in your principal place of residence in Australia. Notwithstanding this, based on the facts above, you will establish a permanent place of abode in Country X. You intend to spend several years there for employment purposes, and there is a possibility your employment may be extended. Your spouse will accompany you and thus your emotional ties will be greater overseas than in Australia. You intend to take up your sporting interests and plan to build up your social networks by attending social gatherings and engaging in sight seeing with your spouse and work colleagues. Thus 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 and your spouse 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.

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