Private ruling: Residency
Date of advice: 19 December 2016
Published: May 2017
Ruling period: Year ending 30 June 2016
Date scheme commenced: 1 July 2015

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

Relevant facts and circumstances: General Your country of origin is a foreign country You are a citizen of a foreign country. In the five years prior to your arrival in Australia you lived in a foreign country. You arrive in Australia. The purpose of your visit is to take up an employment position. The type of visa you were granted that allowed you to enter Australia does not allow you to stay in Australia permanently. You have applied to have the end date of your visa extended. You have received an extension. Since your arrival in Australia, you have not applied for citizenship or permanent residency. You intend to apply for permanent residency. You depart Australia occasionally. You had previously entered Australia on holiday on a tourist visa. You have not lodged any foreign income tax returns while living in Australia. Family and social connections You have a spouse. You have dependent children. Your spouse and children accompanied you to Australia on your visa. You have developed social and sporting connection in Australia. You have a large number of friends in Australia through your job, your children's school and a club. Both your children play a sport for a sporting club. You have maintained some social connections with a foreign country: you have friends and family you keep in touch with. Accommodation and assets In Australia you live in home you have rented. It was rented initially for one year but is ongoing. Prior to your arrival in Australia, you lived in your own home in a foreign country. It is being rented out. While in Australia you do not own or have a permanent home available for your use in another country. You have savings and investments in a foreign country. You have a bank account in Australia with some savings. Income and employment You receive income from sources outside of Australia, all of which remains in a foreign country: While in Australia you do not still have an employment position or job being held for you in any overseas country. Neither you nor your spouse has ever been a Commonwealth of Australia Government employee for superannuation (super) purposes. You have not enrolled in any course of study while in Australia that was for more than six months.

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 are a resident of Australia, specifically: ● You moved to Australia from a foreign country to live and work. ● Your intention is to remain permanently in Australia. You intend to apply for permanent residency. ● In Australia you live in a rented dwelling. You own a dwelling in a foreign country which is being rented out. ● You have permanent employment in Australia. You do not have a position being held for you in a foreign country. ● Your spouse and children accompanied you to Australia. ● Since arriving in Australia you made short oversea holiday trips. ● You have not lodged any foreign income tax returns while living in Australia ● You have some income from a source outside of Australia but it remains in a foreign country. ● In Australia you have a bank account with some savings. ● You have developed social and sporting connection in Australia. ● You maintain social connections with a foreign country: friends and family you keep in touch with. Based on a consideration of all of the factors outlined above, you are a resident of Australia according to ordinary concepts as you maintained a continuity of association with Australia for the period of the ruling. | Detailed Reasoning - Your residency status: As you are a resident of Australia under one 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.