Private ruling: Residency
Published: September 2014
Date scheme commenced: 1 July 2013

Ruling: Question and answer: | Are you a resident of Australia for income tax purposes? | Yes.


Relevant legislative provisions: Income Tax Assessment Act 1936 Section 6(1) | Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Detailed Reasoning - Residency: 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) and subsection 995(1) of the ITAA 1997. The definition provides four tests which will help us ascertain whether you were a resident of Australia for income tax purposes when you came here on a working holiday in January 2011. These tests are: (i) residence according to ordinary concepts; (ii) the domicile test; (iii) the 183 day/usual place of abode test; and (iv) the Commonwealth superannuation test. The primary test for deciding your residency status is whether you resided in Australia according to the ordinary meaning of the word resides. However, where you were not residing in Australia according to ordinary concepts, you may still have been considered a resident of Australia for tax purposes if you satisfied the conditions of one of the other three tests. | Detailed Reasoning - Residence according to ordinary concepts: 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 TR 98/17 Income tax: residency status of individuals entering Australia discusses the Commissioners view on the residency status for tax purposes of individuals entering Australia. The ruling states that when determining residency according to ordinary concepts we must look at all the facts and circumstances of each individual. In particular, their behaviour and period of physical presence in Australia are significant aspects and are examined together with the following factors: _ intention or purpose of presence; _ family and business/employment ties; _ maintenance and location of assets; and _ social and living arrangements Behaviour You arrived in Australia with your family for the purpose of employment. Since your arrival you have obtained long term rental accommodation with your family. In addition have purchased household goods, established a network of friends and engaged in local sporting activities. This behaviour is consistent with someone who has established a routine or pattern of habitual behaviour in Australia. Period of physical presence in Australia When behaviour consistent with residing here is demonstrated over a considerable period of time, you will be regarded as a resident from the time the behaviour commences. The Commissioner's view of the law is that 6 months is a considerable time when deciding whether an individual's behaviour is consistent with residing here. In your case you entered Australia on a long term visa. Since arriving in Australia you have returned to country T once a year for a number of weeks for the purpose of visiting family and friends and for social events. | Detailed Reasoning - Conclusion: In view of the above, the Commissioner considers that your behaviour in Australia reflects a degree of continuity, routine and habit that is consistent with residing here. Accordingly, you are considered to be an Australian resident for taxation purposes under the 'resides test'. As you have satisfied one of the four residency tests, it is not necessary to consider the remaining 3 tests. | Detailed Reasoning - Your residency status: As you are considered to be a resident of Australia under one of the tests of residency outlined in subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936, you are an Australian resident for taxation purposes for the years included in this ruling.

Relevant facts: You were born in country T and are a citizen of country T. | You have a spouse and dependants. | You arrived in Australia with your spouse and one of your dependants. | Your other dependant remained in country T to finish their secondary graduation at school before joining you at a later date. | You arrived in Australia on a 'Temporary Business Entry Visa that is valid for a number of years. | The purpose of your arrival in Australia was for employment. | You are a freelance designer and derive income from both Australian and International sources. You have a registered business. | After arriving in Australia and living in short term accommodation you found long term rental accommodation. | Since arriving in Australia you have returned to country T once a year for a number of weeks for the purpose of visiting family and friends and for special events. | When you returned to country T you stayed with family and friends. | Your assets in Australia consist of bank accounts, household goods etc. | You intend to purchase a home once your income level stabilises. | Your assets in your country of origin consist of a bank account and old furnishings that are being stored at your parents place. You have recently disposed of a plot of land that you had once planned to establish as your main residence. | Your social and sporting ties in Australia consist of friends you have met through your spouse's workplace and your dependents school. You are a member of a local gym and are engaged in sporting activities with others. | Your social and sporting ties in country T consist of family and friends whom you keep in contact with via the internet. | You intend to apply for permanent Australian residency status and remain in Australia indefinitely.