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

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


Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1). | 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 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 • the superannuation 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'. 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'. In considering the definition of 'reside', the courts have stated that the word ' reside' should be given the widest meaning. 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: (i) Physical presence in Australia (ii) Nationality (iii) History of residence and movements (iv) Habits and "mode of life" (v) Frequency, regularity and duration of visits to Australia (vi) Purpose of visits to or absences from Australia (vii) Family and business ties to different countries (viii) Maintenance of Place of abode. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. | Detailed Reasoning - (i) Physical presence in Australia: A person does not necessarily cease to be a resident because he or she is physically absent from Australia. In Koitaki Para Rubber Estates Limited v Commissioner of Taxation [1941] HCA 13; 64 CLR 241, Williams J stated (at 64 CLR 241 at 249): Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place , together with an intention to return to that place and an attitude that the place remains home . You are living in Australia. You have permanent residency status and do not intend to leave Australia. | Detailed Reasoning - (iii) History of residence and movements: You live in Australia and have permanent residency. You have employment here. You intend to live here permanently. | Detailed Reasoning - (iv) Habits and "mode of life": You have commenced working in Australia. You are living with your spouse in Australia. You have applied and been granted permanent residency in Australia. | Detailed Reasoning - (v) Frequency, regularity and duration of visits to Australia: Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country. You have lived in Australia since late 20XX. You only leave Australia to visit family in Country A on holiday. | Detailed Reasoning - (vi) Purpose of visits to or absences from Australia: The purpose of your absences from Australia is to visit family and friends on holiday. | Detailed Reasoning - Family: You are living with your spouse in Australia. | Detailed Reasoning - Business or economic ties: You have employment in Australia. | Detailed Reasoning - Assets: You have a bank account in Australia. | Detailed Reasoning - Maintenance of Place of abode in Australia: You live with your spouse in Australia. This is your permanent place of residence. | Summary: As stated above, no one single factor is decisive, the weight given to each factor depends on individual circumstances, and the word 'reside' should be given the widest meaning. There are various factors outlined above which indicate that you will cease to be a resident of Australia. Specifically; • You have work in Australia. • You have permanent residency in Australia. • You live with members of your family in Australia. • You intend to live in Australia permanently. Based on a consideration of all of the factors outlined above, you have maintained a continuity of association with Australia since you moved here permanently. You intend to remain in Australia permanently and you have permanent residency status in Australia. Therefore, you will be residing in Australia in accordance with the ordinary meaning of the word. You will be a resident under the resides test of residency for the income tax year ending 30 June 2014. | Detailed Reasoning - Conclusion.: As you meet the resident of Australia requirements under the resides test, the other tests will not be considered.

Relevant facts: You hold Country A citizenship. | Your country of origin is Country A. | You arrived in Australia to marry an Australian. | You have received permanent residency. | You intend to reside in Australia permanently. | You hold a bank account in Australia. | You have a house and land in Country A. | You have no income from non- Australian sources.