Private ruling: Residency
Date of advice: 6 October 2015
Published: October 2015
Ruling period: Year ending 30 June 2015
Date scheme commenced: 27 October 2015

Ruling: Question and answer | Are you a resident of Australia for taxation purposes? | Yes.

Relevant facts and circumstances: Your country of origin is a foreign country. You are a citizen of a foreign country. You lived in a foreign country. You and your spouse left a foreign country so you could attend school for two years in a foreign country. You sold your hard to ship belongings and sent the rest on a boat to Australia. You left your permanent residence in a foreign country and visited with the family before arriving in Australia. You arrived in Australia on a visa that is valid for several years. Your spouse arrived two weeks later. You have not previously entered Australia. You have not left Australia for any period since first arriving. You and your spouse intend to settle permanently in Australia. Neither you nor your spouse has a return airline ticket. Your goal was to secure a job with an Australian company upon graduation so that you could be in the preferred region closer your spouse's family in a foreign country but still be in an English-speaking country. You are employed in Australia. You signed a contract with a company. Your contract began in October 20XX and is on-going. However, you were not physically present in Australia for the entire duration of the work. Your employment can be extended and will continue for at least several years. As part of that contract they agreed to pay you $X for several months. The payment was contingent on re-locating to Australia to work there for the foreseeable future. Had you decided not to move to Australia, you would have had to repay the money in full. You are renting a furnished apartment on a monthly basis because your shipment from a foreign country was delayed and you do not yet have furniture. Once your furniture arrives, you will sign a long-term lease. Prior to your arrival in Australia you lived in rented accommodation. You do not have a permanent home available for your use in another country. You have not lodged any foreign income tax returns while living in Australia. You and your spouse have friends and social connections in Australia, but you do not belong to any formal organized social clubs. You have not maintained any professional, social or sporting connections with a foreign country. You have no significant assets in a foreign country. The rest of your assets are currently in Australia or in transit. You no longer have a job in a foreign country. Neither you nor your spouse are or were a Commonwealth of Australia Government employee for superannuation purposes.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Subsection 995-1(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 • the superannuation test. The first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650) . 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 (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. There are several factors outlined above which indicate that you have become a resident of Australia, specifically: • You have moved from a foreign country to Australia to live and work. • Your spouse has accompanied you to Australia. • You entered Australia on a visa that is valid for several years. • You have not left Australia for any period since first arriving. • You and your spouse intend to settle permanently in Australia. • Neither you nor your spouse has a return airline ticket. • Your goal was to secure a job with an Australian company so that you could be in the preferred region closer your spouse's family in a foreign country but still be in an English-speaking country. • You signed an employment contract to work as a management consultant. You employment is on-going. Your employment can be extended and will continue for at least several years. Your contract required you to re-locate to Australia. • You are renting a furnished apartment on a monthly basis because your shipment from a foreign country was delayed and you do not yet have furniture. Once your furniture arrives, you will sign a long-term lease. • Prior to your arrival in Australia you lived in rented accommodation in a foreign country. You do not have a home available for your use in another country. • You and your spouse have friends and social connections in Australia. • You have not maintained any professional, social or sporting connections with a foreign country. • You have no significant assets overseas. • The rest of your assets are currently in Australia or in transit. • You no longer have a job in a foreign country. Based on a consideration of all of the factors outlined above, you are a resident of Australia according to ordinary concepts as you will maintain a continuity of association with Australia. Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the resides test), we will also include a discussion of the 'domicile and permanent place of abode' test as an alternative argument. | Detailed Reasoning - The domicile and permanent place of abode test: Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia. Domicile A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person may acquire a domicile of choice in another country if they have the intention of making their home indefinitely in that country. The intention needs to be demonstrated in a legal sense, for example, by way of obtaining a migration visa, becoming a permanent resident or becoming a citizen of the country concerned. As you are still a citizen of a foreign country while living in Australia, your domicile is a foreign country and remains unchanged. Permanent 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 you intend to live for the rest your life. An intention to return to Australia in the foreseeable future to live does not prevent you in the meantime setting up a permanent place of abode elsewhere. It is clear from the case law that a person's permanent place of abode cannot be ascertained by the application of any hard and fast rules. It is a question of fact to be determined in the light of all the circumstances of each case. In your case: • You have moved from a foreign country to Australia to live and work. • Your spouse has accompanied you to Australia. • You entered Australia on a visa that is valid for several years. • You and your spouse intend to settle permanently in Australia. • You have obtained employment in Australia which is on-going. Your contract required you to re-locate to Australia. You no longer have a job in a foreign country. • You are renting a furnished apartment on a monthly basis because your shipment from a foreign country was delayed and you do not yet have furniture. Once your furniture arrives, you will sign a long-term lease. • Prior to your arrival in Australia you lived in rented accommodation in a foreign country. You do not have a home available for your use in another country. The Commissioner is satisfied you have a permanent place of abode in Australia. Therefore, you are a resident of Australia under the 'domicile and permanent place of abode' test of residency. As you have passed two residency tests, there is no need to consider the 183-day and the superannuation tests. | Detailed Reasoning - Your residency status: As you are a resident of Australia under two of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are considered to be an Australian resident for taxation purposes.