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

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

Relevant facts and circumstances: Your country of origin is Australia and you are an Australian citizen. You left Australia for country X with your spouse and children in late 2010. Your spouse had been offered employment in country X and you wished to be near your spouses ageing parents. You initially stayed with family and friends in country X and moved into rental accommodation in early 2011. You are still living in this accommodation. You returned to Australia in mid 2012 to visit family and for your spouse to pursue employment opportunities. Your spouse was offered longer term employment in country X and you left Australia after a stay of approximately X weeks. You and your spouse are residents of country X for income tax purposes. You intend to stay in country X indefinitely but not permanently. Your only Australian assets are bank accounts and you do not have any assets in country X. You do not have a place of residence in Australia. You maintain strong family and social connections in both Australia and country X. Neither you nor your spouse is employed by the Australian Commonwealth government.

Relevant legislative provisions: Income Tax Assessment Act 1997 - section 6-5

Reasons for decision: Summary: 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. The terms 'resident' and 'resident of Australia', in regard to an individual, are defined within the tax provisions. 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, and · 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 (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 considered to 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. 5 th 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, you have been living with your family in the same residence in country X for the entire financial year ending 30 June 2012 and also for the majority of the current financial year ending 30 June 2013. Your spouse has been working in country X for the majority of this time. Based on the above, you are not residing in Australia according to the ordinary meaning of the word and do not meet 'the resides' test. You are not a resident of Australia under this test. | Detailed Reasoning - The domicile test: Under this test, a person is a resident of Australia for income tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. | Detailed Reasoning - Domicile: Domicile is a legal concept, determined according to the Domicile Act 1982 and common law rules established by private international law cases. Domicile is the place that is considered by law to be your permanent home. Domicile by origin is attributed to individuals at birth and is usually decided according to the domicile of the person's father. In your case, you were born in Australia and are an Australian citizen. Therefore, your domicile by origin is Australia. Individuals may change their legal domicile by choice if there is both a change of residence to another country and an intention of making the change permanently or at least indefinitely. IT 2650 explains that persons leaving Australia temporarily would usually be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law. 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. Based on your intention to live in country X indefinitely, but not permanently, and the other information you have provided, we consider you have not changed your legal domicile by choice. Therefore, you have maintained your Australian domicile. | 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. In your case, you and your family have established a home in country X, you do not have a residence in Australia, your spouse is working in country X and you intend to live in country X for the foreseeable future. Therefore, the Commissioner is satisfied that you have established a permanent place of abode outside Australia and you are not a resident of Australia under this test. | Detailed Reasoning - The 183 day test: In your case, you were not in Australia for more than 183 days in the financial year ending 30 June 2012 and you will not be in Australia for more than 183 days in the current financial year ending 30 June 2013. Therefore, you are not a resident of Australia under this test. | Detailed Reasoning - The superannuation test: An individual is considered to be an Australian resident for income tax purposes 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. You are not a resident under this test as you and your spouse are not employed by the Australian Commonwealth government. | Detailed Reasoning - Your residency status: You are not a resident of Australia for income tax purposes for the financial years ended 30 June 2012 and 30 June 2013 as you did not meet any of the tests of residency.

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.