Private ruling: Residency - working overseas
Date of advice: 7 June 2016
Published: July 2016
Ruling period: Year ending 30 June 20xx | Year ending 30 June 20yy | Year ending 30 June 20zz
Date scheme commenced: 20xx

Ruling: Q1: Are you a resident of Australia for income tax purposes whilst working overseas? | A1: No.


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

Reasons for decision: Summary: An Australian resident is defined in subsection 995-1 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 paragraph 6(1)(a) 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 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 if they meet the conditions of one of the other three tests. | Detailed Reasoning - 1. 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; have 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'. In your case, since your employment ties will be in Country A where you have an open-ended work contract, you will not be dwelling permanently or have a settled place of abode in Australia during the period you are working overseas. Therefore, you will not be considered as residing in Australia during that time. | Detailed Reasoning - 2. The domicile test: Generally, 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. | Detailed Reasoning - Domicile: 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. Although you maintain an association with Australia with your rental property, your associations with Country A are more significant since: • You have invested significant sums of money into the partnership • your spouse and children have accompanied you to Country A • you have leased a home in Country A • you will have purchased household goods • you will have purchased a vehicle • you have set up a bank account. Based on these facts, it is therefore considered that you will have established a permanent place of abode in Country A. Therefore, you are not considered to be a resident of Australia for tax purposes under the domicile test. | Detailed Reasoning - Your residency status: As you are not deemed to be an Australian resident for income tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you will not be considered to be an Australian resident from the date of your departure from Australia.

Relevant facts: You were born in Australia are an Australian citizen | You also hold a foreign passport | You have residency working status in Country A | You lived permanently in Australia until a date in 20xx when you departed to live permanently or indefinitely in Country A | You moved to Country A to join a business partnership | Your role is non-transferable out of the region | You intend to reside in the Country A permanently and have no plans to return to Australia | You have leased a home in Country A where you and your family will live | You intend to purchase a home overseas | You do not have any assets overseas except for a bank account with a bank in Country A and your salary will be paid into that account | You have a former family home in Australia which you have rented out, and you own another property in Australia which is also rented | Does Part IVA, or any other anti-avoidance provision, apply to this ruling?: The ruling is limited to the question raised. | Residents departing Australia | Technical Assurance: This advice satisfies corporate procedures around legal reasoning and decision making.