Private ruling: Residency for tax purposes
Date of advice: 7 January 2019
Published: April 2019
Ruling period: Period ending the 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Am I currently a resident of Australia for Tax purposes? | A1: No

Relevant facts and circumstances: You were born in Country Y. You lived in Country Y prior to your arrival in Australia. You arrived in Australia during the last financial year. You arrived on a working holiday visa. This is a temporary visa. You applied to have your visa extended; it was granted and cannot be further extended. When you came to Australia you did not have the intention of staying there permanently. You do not have a spouse or any dependents. You have sporting connections in Australia – you are a member of 2 gyms. You rent a home in Australia with a housemate. Your rental agreement is until the end of your visa. You lived with your grandmother in Country Y. You do not own any assets outside of Australia. You have a bank account. You do not receive any income from outside of Australia. You currently work as a contractor. You have never been eligible for Commonwealth employee superannuation. You have never been enrolled in a course of study while in Australia.

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

Reasons for decision: Summary: You were not a resident for tax purposes for the 20XX financial year. | Detailed Reasoning - Detailed reasoning: 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 derived 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. This includes employment income, rental income, Australian pensions and annuities and capital gains on Australian assets. The terms resident and resident of Australia 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: ● resides test ● domicile test and permanent place of abode test ● 183 day test and ● 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 then the remaining three tests do not need to be considered as residency for Australian tax purposes has already been established. | Detailed Reasoning - The resides (ordinary concepts) test: The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3rd 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'. The Courts and the Tribunal have generally taken into account the following eight factors in considering whether an individual is an Australian resident according to ordinary concepts in an income year: ● physical presence in Australia; ● nationality; ● history of residence and movements; ● habits and 'mode of life' ● frequency, regularity and duration of visits to Australia; ● purpose of visits to or absences from Australia; ● family and business ties with Australia compare to the foreign country concerned; and ● maintenance of a place of abode. The weight to be given to each factor will vary with the individual circumstances and no single factor is necessarily decisive. | Detailed Reasoning - Physical presence in Australia: Taxation Ruling TR 1998/17 Income tax: residency status of individuals entering Australia considers physical presence or length of time by itself is not determinative of residency. An individual's behaviour as reflected by a degree of continuity, routine or habit that is consistent with residing in Australia is relevant. The visa you are currently in the country on is a Working Holiday Visa (417). The visa is designed for people who do not intend to stay in Australia, but intend to have a holiday while working some of the time. This allowed you to stay in Australia for one year with a possible extension, which you have taken. You have been physically present in Australia for the time in question. | Detailed Reasoning - Nationality: You were born in Country Y and have family remaining in Country Y. | Detailed Reasoning - History of residence and movements: You have moved three times during your time in State A and have lived in rental properties. Your movements are more indicative of a holiday way of life rather than a settled residential way of life. | Detailed Reasoning - Family ties with Australia: You have no family ties with Australia. | Detailed Reasoning - Maintenance of a place of abode: You have not had a regular place of abode while you have been in Australia; currently you live in rental accommodation with a housemate. To be an Australian resident you must demonstrate that your living and working arrangements are consistent with making Australia your home and show that you are not simply in Australia as a visitor or a tourist but are living and working here with a settled way of life. On the information you have provided you have not demonstrated that your living and working arrangements extend beyond what would demonstrate an intention to be in Australia temporarily as a working holiday maker. You have moved addresses and have worked for more than one employer. You have lived in Australia greater than six months however you have made no commitment to making your stay more permanent. Your visa requires you to leave the country in Mth/20XX and cannot be extended beyond that date. You do not meet the resides test as you have not exhibited a routine or pattern of habitual behaviour. Your purpose and pattern of living are not to settle here for a period but to be a traveller on a holiday in compliance with your 417 visa. | Detailed Reasoning - The domicile test: Generally speaking, persons entering Australia temporarily would be considered to have maintained their foreign domicile unless it is established that they have acquired a different domicile of choice or by operation of law. In order to show that a new domicile of choice in Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in Australia e.g., through having obtained a migration visa. You do not meet the domicile test as you have not clearly shown that you intend to make Australia your home indefinitely, and therefore have not changed your domicile. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person’s usual place of abode is outside Australia and the person does not intend to take up residence in Australia. The Commissioner is satisfied that you do not meet the 183 days test as your usual place of abode is outside of Australia. | Detailed Reasoning - The superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee. You are not eligible to contribute to the relevant Commonwealth superannuation funds. You will not be treated as a resident under this test. | Detailed Reasoning - Your residency status: Based on all the facts, your behaviour is consistent with not residing in Australia as you do not satisfy any of the four tests of residency outlined in subsection 6(1) of the ITAA 1936, you will not be a resident of Australia for income tax purposes for the year ended 30 June 20XX. As you have earnings in Australia and are registered for an ABN and GST you have a requirement to lodge income tax returns and Business Activity Statements.