Private ruling: Residency
Published: April 2014
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Questions and answers | 1. Are you a resident of Australia for taxation purposes? | Yes. | 2. Are you a temporary resident of Australia for taxation purposes? | Yes.

Relevant facts and circumstances: Your country of origin is Country X and you are a citizen of Country X. You arrived in Australia a few years ago. You held a Special Category Visa (SCV) when entering and staying in Australia. You lived in Country X prior to your arrival in Australia. You intend to return to Country X permanently at some stage. Upon your arrival in Australia, there was no definite period decided in regard to how long you would live in Australia, when you would leave Australia, and when you would return to Country X permanently. However it was likely that you would stay in Australia for approximately z years from your arrival and return to Country X permanently after that. You have a spouse and children. Your spouse took a permanent employment role in Australia and you and your children accompanied your spouse to Australia. You rented a house in Australia and lived there from when you arrived in Australia up until now. You rented out your home in Country X, which is a house jointly owned by you and your spouse. You occasionally leave Australia to Country X for short periods of time. You entered an employment contract with your current employer. The contract was extended from one year to two years and will possibly be further extended. You do not have a position held open for you in Country X. The assets you have in Australia include bank accounts and investments. The assets you have in Country X comprise of bank accounts, investments, the house jointly owned with your spouse and a jointly-owned holiday house. You receive non-Australian source income, which is rental income and interest income from Country X sources. You have been involved in social activities with your work mates and neighbours in Australia. You attend general fitness activities in Australia. You have family connections and friends in Country X. Your spouse's permanent employment role in Australia is still continuing. Your children are attending schools in Australia. Neither you nor your spouse has ever been employed by the Australian Commonwealth government.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1936 Subsection 6(1) | Domicile Act 1982 | Social Security Act 1991 Subsection 7(2) | Migration Act 1958

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; and • the Commonwealth superannuation fund 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 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 resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word reside. As the word "reside" is not defined in Australian taxation law, it takes its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936. The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2013, sixth edition, Macmillan Publishers Group, Australia, 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'. The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant: • physical presence in Australia; • nationality; • history of residence and movements; • habits and 'mode of life'; • frequency, regularity and duration of visits to Australia; • purpose of visits to or absences from Australia; • family and business ties with Australia compared to the foreign country concerned; and • maintenance of a place of abode. The weight given to each factor varies with individual circumstances and no single factor is necessarily decisive. To determine whether or not you are residing in Australia for taxation purposes, it is necessary for us to examine each of these factors in the context of your circumstances. | Detailed Reasoning - Physical presence in Australia: In your case, you moved to Australia a few years ago and established a rental accommodation in Australia. You lived there up until now. You occasionally leave Australia to Country X for short periods of time. Therefore, your physical presence was in Australia. However, as mentioned above, no single factor is necessarily decisive. The test is, whether you have retained, or will retain, a continuity of association with a place in Australia, together with an intention to return to that place and an attitude that the place remains home. | Detailed Reasoning - Nationality: You were born in Country X and are a citizen of Country X. | Detailed Reasoning - History of residence and movements: You were born in Country X and moved to Australia. | Detailed Reasoning - Habits and 'mode of life': You and your family moved together to Australia in 20XX for a likely period of five years and: • you have established a rental accommodation in Australia; • your spouse entered a permanent employment role with their current employer and you and your children accompanied your spouse to Australia; • you rented out your Country X residence; • you involved with social and fitness activities in Australia; • you took an employment contract in Australia which has been extended from one year to two years, and will possibly be extended again; • your children are attending schools in Australia. You have taken actions that are consistent with someone who is living in Australia for an extended period of time. | Detailed Reasoning - Purpose of visits to or absences from Australia: You have been in Australia for most of the time. You occasionally leave Australia for Country X for short periods of time. | Detailed Reasoning - Family: Your spouse and children are living in Australia so your closest family ties will be in Australia. | Detailed Reasoning - Business or economic: You have taken up an employment contract in Australia. You do not have an employment position held open for you in Country X. You receive rental income and interest income from Country X sources. You have stronger business ties with Australia than Country X. | Detailed Reasoning - Assets: The assets you have in Australia include bank accounts and investments. The assets you have in Country X comprise of bank accounts, investments, the house jointly owned with your spouse and a jointly-owned holiday house. You have stronger financial ties with Country X than Australia through the location of your assets. | Detailed Reasoning - Maintenance of a place of abode in Australia: You established a rental accommodation in Australia and the lease is still ongoing. Therefore it is considered that you are maintaining a place of abode in Australia with the lease of your rental property. | Detailed Reasoning - Summary of the resides test: Although you have stronger financial ties with Country X, consideration of the factors outlined above shows that you are residing in Australia according to the ordinary meaning of the word. Therefore, you are a resident of Australia under this test. As you have satisfied the "resides" test, no further tests are required. | Detailed Reasoning - Temporary Residency: According to section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997), you will be a temporary resident if you are an Australian resident for taxation purposes and satisfy all of the following conditions: (a) you hold a temporary visa granted under the Migration Act 1958 ; and (b) you are not an Australian resident within the meaning of the Social Security Act 1991 ; and (c) your spouse is not an Australian resident within the meaning of the Social Security Act 1991 . In your case, you hold a temporary visa (SCV) that was granted under the Migration Act 1958 , and neither you nor your spouse are an Australian resident under the Social Security Act 1991 (according to subsection 7(2) of the Social Security Act 1991 , an "Australian resident" has to be either an Australian citizen, or holding a permanent visa or Protected SCV). You satisfy all the three conditions. Therefore, you are a temporary resident for taxation purposes under section 995-1 of the ITAA 1997. | Summary: As you are an Australian resident for income taxation purposes under the "resides" tests of residency for the income year, you are an Australian resident for taxation purposes for that year. As you are a resident of Australia for taxation purposes and satisfy the conditions for temporary resident under section 995-1 of the ITAA 1997, you are a temporary resident for taxation purposes for the income year.