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

Ruling: Question and answer: | Are you a non-resident of Australia for income tax purposes from the date you left Australia on date A in the 2010-11 income year? | Yes


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | 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: 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 left Australia on date A to live and work in country S for an indefinite period. As you are living and engaged in working overseas for an extended period, you are not considered to have been residing in Australia. Accordingly, you are not a resident 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 considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. 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. From the information that you have provided, when you moved to Australia you elected to become an Australian citizen proving an intention to make Australia your home indefinitely. Therefore you have adopted Australia as your new domicile of choice. 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 you: · departed Australia on to commence work with a private construction company as a civilian contractor in country S for an indefinite period; · began providing contracting services to another overseas company in country S once you had completed your initial employment contract; · have no plans to return to Australia on a permanent basis in the short term; · have lived in country S since your departure from Australia; · have returned to Australia for a very short period since you first left Australia; · lived in the same employer provided military base accommodation for both your employment contracts; · have no dependants; and · do not have any sporting or social ties in Australia. On balance and based on the above, the Commissioner is satisfied that you have a permanent place of abode outside of Australia and so considers that you are not a resident for taxation purposes under the domicile test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for more than183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You will not be in Australia for a period greater than 183 days for the years included in this ruling, therefore you are not considered to be a resident of Australia for income tax purposes under this 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. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS. As you are not eligible to contribute to the Public Service Superannuation Scheme or the Commonwealth Superannuation Scheme, you are not a resident of Australia under the superannuation test. | Detailed Reasoning - Your residency status: 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 an Australian resident for income tax purposes for the period included in this ruling.

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. | Relevant facts: You were born in country R. | You are over 16 years of age. | You moved to Australia and became an Australian citizen several years ago. | You are single with no dependants. | You were employed by the Australian Defence Force (ADF) and were deployed to country S. | Your contract with the ADF ended and you returned to Australia. | After a short stay in Australia you returned to country S on date A in the 2010-11 income year to commence work with a private company as a civilian contractor. | You were employed by the company for an extended period. | The wages derived from your services were paid into your Australian bank account due to the lack of banking facilities in country S. | During your stay in country S you lived in a military style complex provided by your employer. | After the completion of your contract you took a short break but did not return to Australia during this period. | After your short break you returned to country S and began providing contracting services to another overseas company. | During this contract you are currently living in the same living facilities provided by your previous employer. | You are employed under an ongoing contract, which may be terminated at short notice. | Once your current contract expires you intend to find a similar contract. | Since your initial departure you have only spent a short period in Australia. During this visit you spent a very short time at your home with a house sitter and the remainder of your time in another capital city. | After the completion of your first contract you took another short break, however you did not return to Australia. | Your assets in Australia consist of the following; | · an investment portfolio with a financial provider. | You receive the following income from your Australian assets; | · distribution from the investment fund. | You disposed of your motor vehicle prior to leaving Australia. | While you have been working in country S your house is occupied by a house sitter rent free. | You do not own any overseas assets with the exception of a push bike. | You have not paid any tax on the income that you have derived overseas. | You do not have any social and sporting ties to Australia. | You participate in a number of social activities on your base in country S. | Your intention is to live and work in country S for an indefinite future period.