Private ruling: Residency of Australian taxation purposes.
Date of advice: 29 November 2017
Published: April 2018
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 01 July 2016

Ruling: Q1: Are you a resident of Australia for tax purposes for the 2017 and 2018 financial years? | A1: Yes

Relevant facts and circumstances: You country of origin is Country A. You arrived in Australia with your family in early 2017. You entered the country on a visa. You have a contract to work for up to three years. You are renting accommodation for your family. You have established connections to the community including school, volunteer work and being an associate member of an industry organisation. You still own property in Country A. You are a member of the Country A industry association. You plan to leave Australia early 2018.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Subsection 995-1(1) Detailed reasoning | Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as 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 offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: | ● the resides test, | ● the domicile test, | ● the 183 day test, and | ● the superannuation test. | The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established. | Where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident if they meet the conditions of one of the other tests. | The resides (ordinary concepts) 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'. | Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the ‘resides’ test: | (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. | These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/ 17 Income tax: residency status of individuals entering Australia . | It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. | In your case: | ● You entered Australia with the intention of residing here for at least a year. | ● You live in Australia with your family. | ● You exhibit the normal habits and “mode of life” of a person residing in Australia. | ● Your work, social and financial commitments demonstrate you are residing in Australia. | Consequently you were residing in Australia according to the ordinary meaning of the word. Therefore, you meet the ‘resides test’ and are a resident of Australia for tax purposes. | Conclusion | 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. | You may, however, be entitled to a foreign income tax offset for the foreign tax you paid overseas. Please refer to our website www.ato.gov.au for further information regarding foreign income tax offset.