Private ruling: Residency
Published: April 2013
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ending 30 June 2013
Date scheme commenced: 1 July 2010

Ruling: Question and answer | Were you a resident of Australia for taxation purposes for the period you were overseas? | No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You were born in Australia and you are a citizen of Australia. You and your spouse relocated overseas a number of years ago. You resigned from your employment in Australia. Your spouse took up employment overseas. You had a dependants pass for the overseas country. You sold your home in Australia and paid out the loan and the loan on your rental property. You continued to rent out the rental property. You have adult children who live in Australia. You and your spouse intended to remain overseas until your spouse retired. Your spouse's employment ended as the company was sold. Your spouse secured further employment which only lasted a few months. You and your spouse returned to Australia and have purchased a house and have secured employment. You returned to Australia in late 2010 for medical treatment and for removal of household You made a short trip back to Australia while you were overseas. You also went on a couple of holidays while overseas to other countries. You had two bank accounts in Australia. Neither you nor your spouse are currently or have ever been Commonwealth government employees.

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). ATO view documents | Taxation Ruling IT 2650 (ATO View)

Reasons for decision: Summary: The terms 'resident' and 'resident of Australia', in regard to an individual, are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (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 a resident of Australia for tax purposes if they meet 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'. You and your spouse went overseas on a permanent basis with the intention to stay long term. You lived in the same property for the majority of your stay overseas. Your spouse was employed for the majority of your stay overseas. You only returned to Australia because your spouse's employment ceased overseas. You sold your home in Australia when you went overseas. You were not residing in Australia according to ordinary concepts for the period you were overseas as you were not physically present in Australia and you were living and working overseas. You are not a resident under this test. | Detailed Reasoning - The domicile test: If a person has 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. Your domicile of origin is Australia. Although you intended to live overseas on a permanent basis your visa was not permanent and therefore you have not changed your 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. Although you intended to live overseas on a permanent basis, your visa was not permanent and therefore you have not changed your domicile. 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. You and your spouse lived in the same property overseas for the majority of your stay. Your spouse accompanied you overseas. You sold your family home in Australia. Based on these facts, the Commissioner is satisfied that you established a permanent place of abode overseas. | Detailed Reasoning - The 183-day test: This test does not apply as you were not in Australia for 183 days or more in any financial year while you were overseas. | Detailed Reasoning - The superannuation test: An individual is 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. Only Commonwealth Government employees are eligible to contribute to the PSS and CSS. As you and your spouse were not a Commonwealth Government of Australia employee you will not be a resident under this test. | Detailed Reasoning - Your residency status: You were not a resident for tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 for the period you were overseas.

Disclaimer: You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf. | The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies. | The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions. | Reasons for decision Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.