Private ruling: Residency
Date of advice: 9 August 2016
Published: September 2016
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Question and answer | Were you a resident of Australia for taxation purposes for the period you were in Australia? | No.

Relevant facts and circumstances: You arrived in Australia on a working holiday visa. The visa allowed you to be in Australia for up to 12 months. You were required to leave Australia and return to Country y for family reasons less than 6 months after arriving. Your intention was to come to Australia and travel for up to 12 months. You found work and did not get to travel before you left Australia. Your employer provided you with accommodation while you were working for them. You stayed in backpacker accommodation when you were not working. You live with your parents in Country Y and were living with them prior to coming to Australia. Your home in Country Y was available to you to return to after you left Australia and while you were in Australia.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 995-1(1) | 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 . The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: ● resides test ● domicile and permanent place of abode test ● 183 day test and ● Commonwealth superannuation fund 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. | Detailed Reasoning - The resides (ordinary concepts) test: The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word ' resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test. 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. You came to Australia on a 417 working holiday visa. You intended to stay for up to 12 months which was the length of time the visa was available to you. You intended to travel while in Australia and found work which meant you did not get to travel. Your employer provided your accommodation and you stayed in backpacker accommodation when you were not working. You left Australia for family reasons and returned to Country Y. Based on the facts above you were not residing in Australia according to ordinary concepts. You were not a resident under this test. | Detailed Reasoning - The domicile test: If a person’s domicile is Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. In order to show that an individual's domicile of choice has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. Your Domicile is Country Y. You were not a citizen or permanent resident of Australia. You were not a resident under this test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person’s usual place of abode is outside Australia and the person does not intend to take up residence in Australia. You were not in Australia for more than 183 days and your usual place of abode was in Country Y. You were not a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You are not eligible to contribute to the relevant Commonwealth super fund. You were not a resident under this test. | Detailed Reasoning - Your residency status: You were not a resident of Australia for taxation purposes for the period you were in Australia on a working holiday. You will need to lodge your tax return as a non-resident of Australia.