Private ruling: Residency - entering Australia
Published: October 2012
Ruling period: Year ended 30 June 2012.
Date scheme commenced: 1 July 2011.

Ruling: Q1: Is the income from your work in Australia assessable in Australia? | A1: Yes. | Q2: For the period you were in Australia were you a resident of Australia for taxation purposes? | A2: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 995-1(1). | Income Tax Assessment Act 1936 subsection 6(1). Convention between Australia and Overseas For the Avoidance of Double Taxation, Article X & Y.

Reasons for decision: Detailed Reasoning - Residency: 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 will 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'. Taxation Ruling TR 98/17 provides guidelines in determining the residency status of individuals entering Australia. There are many factors to be considered in determining an individual's residency status. Broadly, the main issues are: · Behaviour while present in Australia, · Intention or purpose of presence, · Family and employment ties, · Maintenance and location of assets, · Social and living arrangements, and · Period of physical presence in Australia. TR 98/17 states the following: The individual's intention, purpose or reason for being in Australia assists in determining whether an individual resides here. While individuals may have multiple reasons, there is usually a main purpose to their presence. A settled purpose, such as employment or education, may support an intention to reside in Australia. However, the intention must be more than merely being a traveller or visitor who may supplement their savings by obtaining casual employment. Staying for a short period for work purposes is normally insufficient to establish that an individual is a resident. The visa notation on the passport is an indicator of the individual's purpose for being in Australia. However, the criteria for determining residency for tax purposes are not the same as the criteria used by the Department of Immigration and Multicultural Affairs. The visa notation is not the only consideration in determining residency for tax purposes, as all the facts surrounding the individual's presence need to be taken into account. In most cases, the Commissioner accepts that a visit to Australia of less than six months is not sufficient time to be regarded as residing here. When determining whether individuals are residing here, if their visit is for six months or more, the Commissioner considers their behaviour while in Australia. You commenced work in Australia; you were working fulltime and were offered an extension to your employment contract which you accepted, extending your initial period of employment to more than 183 days. You were provided resources such as a place to live by your employer, and your only expenses were items such as food. All your family and social/sporting connections are located outside Australia. You are a citizen overseas. Your spouse did not accompany you to Australia but continued to live and work overseas. When your contract finished you returned to live and work overseas. You had no intentions to remain in Australia and were only here for a prearranged employment purposes. You had no intention nor did you, settle or establish habitual behaviours consistent with residence. As you have only left overseas temporarily, we do not consider that you have a established a place of abode in Australia. You are not a resident of Australia under the resides test. | Detailed Reasoning - The domicile test and permanent place of abode test: If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is established at birth when they acquire a domicile of origin, being the country of their father's permanent home. The domicile of origin is retained until such time as a domicile is established by choice or by operation of law in another country. In order to show that a new domicile of choice in or outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. A domicile may be changed by operation of law for example where a person has obtained a migration visa. In your case you were not required to gain a visa to work in Australia as you are a citizen of overseas. Your domicile of origin is located overseas and you have not demonstrated a change to this domicile, legal or otherwise. | Detailed Reasoning - Place of abode: The expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. In essence, a person's place of abode is that person's dwelling place or the physical surroundings in which a person lives. A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere. In your case you have a permanent place of abode overseas with your spouse, and have failed to establish any thing other than a temporary living arrangement with your employer, created for convenience in order to work in Australia. We consider that you have not exhibited any behaviour or made any efforts towards changing your domicile to Australia as you have been living and working here on a short term basis, failing to establish any habitual behaviours. | Detailed Reasoning - The 183-day test: In your case, you were located in Australia for 183 days or more in a year of income. However you have a usual place of abode that is outside of Australia, located overseas and you do not intend to take up residence here. As such you are not an Australian resident. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. You will not be treated as a resident under this test as you are not a member of the PSS or the CSS, a spouse of such a person, or a child under 16 of such a person. | Detailed Reasoning - Your residency status: As you are not considered to be a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, you are not considered to be an Australian resident during your time working here, from the end of 2011 to mid 2012. | Detailed Reasoning - Assessable Income: Australia has concluded taxation agreements with many countries for the avoidance of double taxation and fiscal evasion. The Double Tax Agreement between overseas and Australia at Article X Income From Employment states that the income you earnt from your salaries and wages whilst working in Australia will be assessable in Australia. As you are a non-resident, you will be assessable at non-resident rates.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You came over to Australia to work. | From the time you arrived you were based on site to your work. | You commenced work in Australia near the end of 2011. | Your original contract was extended. | You ended up working an additional period and exited Australia in mid 2012 for overseas. | It total you were present in Australia for over 183 days. | You were only initially in Australia for less than 6 months with your employer; as such you were taxed as a Non-Resident. | You hold overseas citizenship. | Your country of origin is also overseas. | You did not require a visa in Australia due to your status as a citizen of overseas. | You were on a permanent work contract. | Your only Australian asset was a bank account which you still receive your wages into. | You do not have any family in Australia. | You did not have any sporting or social connections in Australia; you were only there to work. | Your spouse stayed and worked overseas whilst you were working in Australia. | You only worked from the same location and did not move around whilst in Australia. | You were housed by your employer and as such did not pay any rent. | Your only expenses were food. | Neither you nor your spouse has ever been a commonwealth government employee in Australia.