Private ruling: Are you a resident of Australia for taxation purposes
Published: September 2013
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 tax purposes? | Yes. | 2. Is the salary you earn in Country X assessable in Australia? | Yes.

Relevant facts and circumstances: You are an Country Y citizen. Your country of origin is Country Y. You originally came to Australia as a tourist. You were granted Australian permanent residency in the financial year ending 30 June 20XX. You have a spouse and child who reside in Australia. You have been working in Country X from 200X until present. Your employment contract requires you to be present in Country X for 2 months at a time, then Australia for one month. When in Australia you live with your spouse, child and your spouse's family. Your Country X visa does not allow you to stay permanently in the country. Your Country X visa is limited to one year and requires renewal each year. The purpose of your overseas visit is employment. You return to Australia every 2 months. In Country X you stay in employer provided accommodation. You have a return plane ticket to Australia. You are the joint owner of a car in Australia with your spouse. Your intention is to live in Australia with your spouse and child. When completing the Australian Immigration Outgoing passenger card you stated the reason for going overseas was employment. Your employment contract is reviewed yearly. You have social ties to Australia. You have not advised any Australian financial institutions with whom you have investments that you are a foreign resident so that non-resident withholding tax can be deducted. You have not advised Medicare or health insurance provider to have your name removed from their records. You have not lodged tax returns in any other countries. You and your spouse have not been Commonwealth Government of Australia employees.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 and | Income Tax Assessment Act 1936 Subsection 6(1).

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, and · 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 considered to 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 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 expanded on the list of factors identified in Taxation Ruling TR 98/17 : Income tax: residency status of individuals entering Australia . Case 5/2013 ../../UA8PU$/Local Settings/Temporary Internet Files/Resident LRD Smith.doc - _ftn2#_ftn2#_ftn2#_ftn2 [2013] AAA 394; 2013 ATC 1-054 (Case 5/2013) and Sneddon v FC of T [2013] AATA 516; 2012 ATC 10-264 (Sneddon's case), for example, considered the following factors in relation to whether the taxpayer resided in Australia: (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. Each of these factors will be considered in turn, with reference, where relevant, to recent Australian case law decisions in which the taxpayer was determined to be a resident of Australia in accordance with subsection 6(1) of the ITAA 1936. | Detailed Reasoning - (i) Physical presence in Australia: As indicated in Iyengar v FC of T [2011] AATA 856; 2011 ATC 10-222 (Iyengar's case), there is a requirement that you at least be physically present in Australia for part of an income year. You have been present in Australia from 200Y from 200X you have worked in Country X and return to Australia every 2 months. You have a return ticket for Australia. You intend to live in Australia permanently with your spouse and child. | Detailed Reasoning - (ii) Nationality: You are a citizen of Country Y with permanent residency in Australia, this is not in itself sufficient to establish that you are an Australian resident for tax purposes. | Detailed Reasoning - (iii) History of residence and movements: You moved to Australia in 200Y and since 200X you have worked in Country X spending every second month in Australia. | Detailed Reasoning - (iv) Habits and "mode of life": In Iyengar's case and Sneddon's case worked overseas after accepting offers from new employers, this is similar to your situation. Your work allows you to spend every second month in Australia with your family; you have a return airline ticket which is indicative of you residing in Australia. You indicated on your outbound flight passenger card that you were only departing temporarily. You stay in employer provided accommodation in Country X, and have a spouse and child living in Australia who you live with when you are not working. | Detailed Reasoning - (v) Frequency, regularity and duration of visits to Australia: You have regally returned to Australia since your departure in 200X. Your visa does not allow you to stay in Country X permanently. You have a return ticket to Australia. | Detailed Reasoning - (vi) Purpose of visits to or absences from Australia: As indicated above, the reason for your absence from Australia is employment. | Detailed Reasoning - Family: The Macquarie Dictionary defines 'family' as: · parents and their children, whether dwelling together or not. · one's children collectively. · any group of persons closely related by blood, as parents, children, uncles, aunts, and cousins. You have a spouse and child that remain in Australia while you are in Country X. You have no family in Country X. | Detailed Reasoning - Business or economic: In terms of 'business' or economic ties, you have employment in Country X. | Detailed Reasoning - (viii) Maintenance of place of abode: In Australia you are residing with your spouse, child and spouse's parents. | Summary: Based on the factors listed above, we consider that you were residing in Australia. You have a 'continuity of association' with Australia as you have family in Australia with who you live with when you are not working. You are a permanent resident of Australia. You have a visa that does not allow you to stay permanently in Country X. At the time of departure you indicated on your passenger card that you were departing on a temporary basis and you have no intention of remaining in Country X permanently. You intend to live in Australia permanently with your spouse and child. You only departed Australia temporarily and intend to return to Australia. You are residing in Australia according to the ordinary meaning of the word. Therefore, you are a resident of Australia under this test. | Detailed Reasoning - Your residency status: As you meet the resides test, you are a resident of Australia for tax purposes. | Detailed Reasoning - Accessibility of income: As you are a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income includes income gained from all sources, whether in or out of Australia. Therefore, in your case, the salary you earn in Country X is assessable in Australia and must be included in your Australian income tax returns.