Private ruling: Residency
Published: August 2013
Ruling period: Year ended 30 June 2013 | Year ending 30 June 2014
Date scheme commenced: 1 July 2012

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

Relevant facts and circumstances: You were born in Country Y and were later granted Australian citizenship. You have dual Australian and Country Y citizenship. You spent the first part of the 20XX year in Australia before undertaking volunteer work in Country Z. You returned to Australia for a period of time and then travelled to Country X to work. You have a working visa for Country X. In Country X you are employed through an agency. You intend to return to Australia in late 20XY and stay here for a period of time. In 20XZ you intend to return to Country X to work again. You will work in Country X until your visa expires then return to Australia to live. You do not have an employment position being held open for you in Australia. Your overseas employer has not provided you with accommodation in Country X. You reside in a flat in Country X and have a tenancy agreement with the people who lease the flat. Your assets in Country X comprise of a bank account, a laptop computer and a mobile phone. You have a national insurance number in Country X. Your Australian assets comprise of bank accounts, a car, a laptop computer and general household items. Your car and household items are located at your family home in Australia. For the last few years in Australia, you lived either at your family home, paid board or rented an apartment. You do not have a spouse or children You have a parent and siblings who live in Australia. You have not had your name removed from the Australian electoral role. You have not had your name removed from Medicare records. You told your bank that you would be in Country X for a year. When completing the Australian immigration outgoing passenger card, you think you stated that you were an Australian resident departing temporarily for employment reasons. You have never been employed by the Australian commonwealth government.

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

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 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 reside. 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. The resides test The ordinary meaning of the word 'reside', according to the Macquarie Dictionary , 2001, rev. 3 rd 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'. In considering the definition of 'reside', the courts have stated that the word 'reside' should be given the widest meaning. The question of whether an individual 'resides' in a particular country is a question of fact and degree and not of law. In deciding this question, the courts have consistently referred to and taken into account the following factors as being relevant: (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. It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances. A person does not necessarily cease to be a resident because he or she is physically absent from Australia. In Koitaki Para Rubber Estates Limited v Commissioner of Taxation [1941] HCA 13; 64 CLR 241, Williams J stated (at 64 CLR 241 at 249): Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home. In the income tax year ended 30 June 20XY you spent periods of time in Australia and two other countries. In the income tax year ending 30 June 20XZ you intend to spend time in Australia and Country X. You will return to Australia to live after your working visa expires. From your movements, it can be seen that you are leaving Australia for temporary periods of time before returning again. This pattern of behaviour commenced in the XXXY income tax year and will continue into the XXXZ income tax year. Consequently, your movements are consistent with a person who is residing in Australia, rather than one who is residing elsewhere. You also have strong family ties to Australia, have retained your Australian assets and banking arrangements, and have left your name on Medicare records and the electoral role. Based on the information provided, you have maintained a continuity of association with Australia and are residing in Australia in accordance with the ordinary meaning of the word. Therefore, you will be a resident under the resides test of residency for the relevant income tax years. As you are a resident under this test, it is not necessary to determine whether you meet the requirements of the other three tests of residency. As you are a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income includes income gained from all sources, whether in or out of Australia.