Private ruling: Residency status
Published: October 2012
Ruling period: Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 6 July 2008

Ruling: Q1: Are you a resident of Australia for income tax purposes? | A1: Yes. | Q2: Are you a temporary resident of Australia for income tax purposes? | A2: Yes. | Q3: Is your foreign sourced income assessable in Australia? | A3: No.


Relevant legislative provisions: Income Tax Assessment Act 1997, Subsection 995-1(1). | Income Tax Assessment Act 1936, Subsection 6(1). | Income Tax Assessment Act 1997, Subsection 6-5. | Income Tax Assessment Act 1997, Section 768-910

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) states that if you are a resident of Australia, your assessable income includes the ordinary income you derive directly or indirectly from all sources, whether in or out of Australia during the income year. | Detailed Reasoning - Residency: The term 'Australian resident' is defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) to mean a person who is a resident of Australia for the purposes of section 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The definition provides four tests for determining whether an individual is a resident for income tax purposes. These are: · residence according to ordinary concepts; · the domicile and permanent place of abode test; · the 183 day test; and · the Commonwealth superannuation fund 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. 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 first question to be asked in considering the residency status of a person is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to apply any of the other tests. The person is a resident of Australia for income tax purposes. The ordinary meaning of the word 'reside', according to the Shorter Oxford English Dictionary , 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 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 quality and character of an individual's behaviour while in Australia assist in determining whether the individual resides here. All the facts and circumstances that describe an individual's behaviour in Australia are relevant. In particular, the following factors are useful in describing the quality and character of an individual's behaviour: · intention or purpose of presence; · family and business/employment ties; · maintenance and location of assets; and · social and living arrangements. No single factor is necessarily decisive and many are interrelated. The weight given to each factor varies depending on individual circumstances. In your case, it is considered that you are an Australian resident for tax purposes under the resides test for the following reasons: · you, your spouse and child came to Australia on a 457 temporary resident visa; · you came to Australia as a result of being offered a posting from your country T employer; · you intended to remain in Australia for the duration of your posting; · you, your spouse and child lived in long term rental accommodation for the duration of your overseas posting; and · you had social ties with you work colleagues in Australia. Based on the information you have provided, it is considered that you are an Australian resident for taxation purposes from the date of your arrival in Australia as your behaviour reflects a degree of continuity, routine or habit that is consistent with residing here. Accordingly, for the period of your Australian posting you are a resident of Australia or income tax purposes under section 995-1 of the ITAA 1997 and section 6-1 of the ITAA 1936. | Detailed Reasoning - Temporary residents: Section 768-910 of the ITAA 1997, provides that ordinary income derived from a foreign source (excluding employment related income and capital gains on shares and rights acquired under employee share schemes) is exempt from income tax in Australia when derived by a temporary resident of Australia. Subsection 995-1(1) of the ITAA 1997 contains the definition of temporary resident and provides that you are a temporary resident if: · you hold a temporary visa granted under the Migration Act 1958; and · you are not an Australian resident within the meaning of the Social Security Act 1991; and · your spouse is not an Australian resident within the meaning of the Social Security Act 1991. However, you are not a temporary resident if you have been an Australian resident (within the meaning of this Act), and any of paragraphs (a), (b) and (c) are not satisfied, at any time after the commencement of this definition. Under the Social Security Act 1991 , an Australian resident is a person who resides in Australia and is either an Australian citizen or holds a permanent resident visa. In applying the conditions outlined under section 995-1(1) of the ITAA 1997 to your circumstance, · you hold a temporary resident visa granted under the Migration Act 1958 · you are not an Australian resident within the meaning of the Social Security Act 1991 because you are not an Australian citizen or hold a permanent residency visa , and · your spouse is not an Australian resident within the meaning of the Social Security Act 1991 Therefore, you are an Australian resident for taxation purposes who also qualifies as a temporary resident under subsection 995-1(1) of the ITAA 1997. Accordingly, any foreign sourced income that you derived with the exception of employment related income and capital gains on shares and rights acquired under employee share schemes, will be exempt from income tax in Australia, under section 768-910 of the ITAA 1997.

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 were born in country T and are a citizen of both country T and country U. | You have a spouse and a dependant. | You are employed by an international organisation. | The nature of your employment with your employer is that you may be required to take up overseas postings to provide your expertise to various international trading arms. The postings are generally for an extended period. | You accepted a posting offered by your employer to travel to Australia to provide expertise in your field. | As a result of your posting you, your spouse and child arrived in Australia on a 457 temporary visa. | During your posting you made a number of short trips to country U for work purposes. | You travelled to country T for a short period for a working holiday. | You travelled to countries C, F and T for a short period for a working holiday. | You travelled to the countries B and C for a short period for a holiday. | When you arrived in Australia you were provided with accommodation for a short period, after which you were required and found a long term leased apartment. | You did not own any assets in Australia during this posting. | While in Australia you owned the following overseas assets and derived the following income; | Country T: 1 investment property (rental income) | 1 main residence (rented out during your Australian posting) | a share port folio (dividends) | Country U investment property (rental income) | During your Australian posting you did not derive any foreign sourced employment income or any capital gains on shares and rights acquired under an employee share scheme. | During your Australian posting you were considered a resident of country T for income purposes and a non-resident of country U for income tax purposes. | You have paid tax on the income derived from your overseas investments to the respective country T and U authorities. | While in Australia your social and social ties revolve around your work colleagues | Your social and sporting ties in country T consist of an extensive network of family and friends. | You have never been a Commonwealth Government of Australia employee. | You have had a simular previous posting in Australia. | You returned permanently to country T on completion of your posting.