Private ruling: Residency and Assessability of income
Published: July 2012
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: XX XXx XXXX

Ruling: Question and answers: | Are you a resident of Australia for taxation purposes from X 2011? | Yes | Is the income you have earned whilst living in Australia assessable in Australia? | Yes | Do you need an ABN if you work only for international clients? | No

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a dual citizen of two countries other than Australia. You are currently living in Australia with your spouse who is working in Australia. You and your spouse arrived in Australia on XX on a visa. Your spouse's work contact is valid until XX, after this point the contract may be extended indefinitely. The contract will be renegotiated before it expires. You work as a XX. You are self employed. You and your spouse have been based in the XX area since you arrived. This is where you will stay until your spouse's contract is renegotiated. They may be required to stay in the XX area or be moved to an 'area of need' in another part of Australia. You and your spouse own a property in XX, this property is in their name only due to issues with purchasing property before you were married. When you arrived in Australia you stayed with friends, you were then put up by your spouse's employer before you moved in to your current rental property where you have been since XX. Your spouse has purchased a car. You have previous friendships (dating back to XX) in Australia and attend weekly exercise classes. You are a XX. Your current client is based in XX and they pay you in XX into your XX bank account.

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

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. | Detailed Reasoning - Residency: 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 test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary is 'to dwell permanently or for a considerable time; having one's abode for a time'. Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia considers the residency status of individuals entering Australia and states that the period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. However, an individuals behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here. The following factors are useful in determining whether your behaviour over the time spent in Australia reflects a degree of continuity, routine or habit that is consistent with residing here: (a) intention or purpose of presence; (b) family and business/employment ties; (c) maintenance and location of assets; and (d) social and living arrangements You intend to remain in Australia for the length of your spouse's employment contract which is until XX. Although this contract may be extended it is your current intention to return to the XX once the contract finishes. You work as a XX, you are self employed. You have a house in the XX which is under your spouse's name only, this is simply due to restraints on your ability to purchase property when you first moved to the foreign country and you weren't a citizen. You and your spouse are renting an apartment in XX and you spouse owns a vehicle here. You have a number of lifelong friends who live in Australia and you attend exercise classes regularly. Although you stayed with friends in paid accommodation for the first few weeks when you arrived in Australia, you have been in rental accommodation since XX. You have had a place of abode in Australia for the past x months and you intend to stay here until at least the end of XX. Although you intend to leave Australia and return to the XX when your spouse's employment contract ends, this does not prevent you from being an Australian resident for the period that you are living in Australia. You have established a routine that is consistent with residing in Australia, your life is settled here, you are living in a rental property, you have friends here and you attend regular extra curricular activities You are an Australian resident for taxation purposes from when you entered Australia on XX. | Detailed Reasoning - Assessability of income: Section 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) states that if you are an Australian resident, your assessable income includes income you derived directly or indirectly from all sources, whether in or out of Australia. This means that you are required to pay tax in Australia on the income that you earn from your international clients. Do you need an ABN? Individuals need an ABN and GST registration in order to claim GST credits for any GST paid for goods and/or services used in a business. If a taxpayer is supplying goods or services within Australia, they will need to be able to quote an ABN so that others businesses do not withhold tax at the top marginal rate when they pay for those goods or services. The export of services is GST free and is not taken into account when calculating GST turnover. All businesses with a GST turnover of $75,000 or more must register for GST and will need an ABN to do this. Businesses with a lower annual turnover may choose to register, but this is voluntary). If a taxpayer is not required to register for GST, they can still apply for an ABN. Businesses registered for GST are required to issue tax invoices that quote their ABN. Under pay as you go taxation, businesses receiving an invoice are required to withhold tax from their payments for goods and services if an ABN is not quoted. This is called no ABN withholding and currently the top marginal tax rate is 46.5% including the Medicare Levy. | Detailed Reasoning - Application you: You are an Australian resident XX, if you continue to work only for international clients and provide services not connected with Australia you do not need an ABN. However, if you start doing work for Australian clients and you expect to have a GST turnover of $75,000 or more then you must register for GST and you will need an ABN to do this. (If your turnover is less than $75,000 then an ABN is not compulsory).

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.