Private ruling: Residency
Published: August 2011
Ruling period: Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2009

Ruling: Question and answer: | Are you a resident of Australia for taxation purposes? | No.

Relevant facts and circumstances: Your country of origin is Australia and you are an Australia citizen. You departed Australia for a foreign country. You have been working for a company in the foreign country. You travel extensively within the foreign country. You are on a contract which lasts several years. You have a visa in the foreign country. Your employment contract with the company can be extended and visa renewed. You are not employed on a fly in/fly out basis but permanently based in the foreign country. You live there in a company house. You will reside permanently in the foreign country for the duration of your employment contract. At the end of your current contract you will make a decision on renewing it or returning to Australia. You visit Australia for holidays. Since departing Australia, have made several return trips to Australia. You will not be in Australia for more than 183 days in any income year You have a bank account in the foreign country. You and your spouse have a bank account in Australia. You and your spouse have links to an Australian superannuation account in the name of a company. You have a portfolio of Australian shares in your name. Your spouse does not accompany you in the foreign country due to security reasons. They remain in your house in Australia. They have been in the foreign country on some occasions but prefers to live in Australia. Your spouse will be retiring soon and so will be spending more time in the foreign country. Your social connections with Australia are with family and friends. You have no sporting connections with Australia. In the foreign country your social activities are with friends, and group get togethers with expat people. You have no sporting activities in the foreign country. You and your spouse have never been Commonwealth Government of Australia employees. You are more than 16 years of age. Relevant legislation 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 Income tax: 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 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 provides 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 have been living and working in the foreign country for several years on contract. You will remain there until the contract expires and possibly longer if your contract is renewed. You have established a residence there in a house provided for you by your employer. You retain a house in Australia where your spouse lives (she will be spending more time in the foreign country shortly). Accordingly, it is considered that you are residing in the foreign country while you are employed there and, therefore, are not a resident of Australia 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. 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 an Australian citizen while living in the foreign country, your domicile is Australia and remains 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, since your arrival, you: · lived and worked in the foreign country · are not employed on a fly in/fly out basis but permanently based in the foreign country · intended to stay until your employment contract expires · maintain a residence in the foreign country in a house provided by your employer · have a house in Australia where your spouse lives · have a bank account in the foreign country · have a bank account, superannuation and portfolio shares in Australia. On balance and based on the above, the Commissioner is satisfied that you have established a permanent place of abode outside of Australia. Therefore, you are not a resident under the domicile test during this period. | Detailed Reasoning - The 183-day test: Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, i.e. 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia. Since departing Australia you have returned to Australia on several occasions but not for a total of more than 183 days in any income year. You expect this pattern to continue for the remainder of your employment contract. Accordingly, you are not present in Australia for more that 183 days in any income year. Therefore, you are not a resident of Australia 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. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You have stated that you and your spouse have never worked for the Commonwealth Government of Australia. As such, you were not eligible to contribute to the PSS or CSS superannuation schemes. Further, you are more than 16 years of age. Therefore, you are not a resident of Australia under the superannuation test. | Detailed Reasoning - Conclusion: As you are not a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are not considered to be an Australian resident for taxation purposes.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.