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

Ruling: Question and answer | Are you a resident of Australia for tax purposes? | No.


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

Reasons for 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 (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 Australian Taxation Office (ATO) view on the residency status of individuals entering Australia is contained in Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia which notes that it is not necessary for an individual to be an Australian citizen or hold a permanent residence visa to be a resident of Australia for taxation purposes. In most cases, the Commissioner accepts that a visit to Australia of less than six months is not sufficient time to be regarded as residing here. However, when an individual is in Australia for six months or more, the Commissioner takes into consideration the individual's behaviour over the time spent in Australia to determine if there is any degree of continuity, routine or habit in the individual's behaviour that is consistent with residing here. In assessing an individual's behaviour while in Australia, the Commissioner considers a number of factors, including: · intention or purpose of presence - TR 98/17 notes that having a settled purpose supports an intention to reside in Australia · employment - TR 98/17 notes that an individual who is dwelling here for a considerable time while on an employment contract would be residing here, whereas a mere visitor on holiday would not · maintenance and location of assets - TR 98/17 notes that having assets in Australia, such as bank accounts, adds weight to concluding an individual's behaviour is consistent with residing here · social and living arrangements - TR 98/17 specifies that social and living arrangements are the way an individual interacts with their surroundings during their stay in Australia. Joining a professional organisation and 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. 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'. You were/are not residing in Australia as evidenced by: • You came to Australia on a working holiday visa with the intention of working and experiencing the Australian lifestyle, • you have worked in Australia for over 6 months, • you consider one state to be your home base although your job required you to travel and stay in country towns, • you have been living in hostel accommodation due to the travel required in your job, so you have no permanent place to live in Australia; and • your plan is to stay in Australia until the near future. In view of the above, the Commissioner considers that your behaviour in Australia does not reflect a degree of continuity, routine and habit that is consistent with residing here, your lifestyle is more like that of a traveller than someone who has settled here. Accordingly, you are not considered to have been an Australian resident for taxation purposes under the resides test during the period. | Detailed Reasoning - The domicile test: If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice. In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in that country. Your intention while in Australia is to live and work here for approximately one year. Since living here you have been employed for over 6 months. However, you have not taken steps to apply for citizenship or a permanent resident's visa in Australia, therefore, your domicile has not changed. The expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. In essence, a person's place of abode is that person's dwelling place or the physical surroundings in which a person lives. A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer in the meantime setting up a permanent place of abode elsewhere. In your case, while in Australia you have not had a permanent place to live and have been living in hostel accommodation in one state, then with a friend in another state, and currently live in accommodation provided by your employer. You did not have an employment contract and your plan is to stay in Australia until the near future. Based on the above, the Commissioner is satisfied that you have established a permanent place of abode outside of Australia. Therefore, you are not a resident under the domicile test. | Detailed Reasoning - The 183-day test: Under the 183 day test you are considered a resident of Australia if you are present in Australia for a total period of more than half of the year of income, that is 183 days, unless the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia. In your case, you were present in Australia for more that 183 days during the period. However, the Commissioner is satisfied that your usual place of abode is outside Australia and you do not intend to take up residence in Australia. Therefore, you were not a resident of Australia under the 183-day test for the period. | Detailed Reasoning - The superannuation test: An individual is still considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. To be eligible to contribute you must be or have been a Commonwealth Government employee You have stated that you have never worked for the Commonwealth Government of Australia. As such, you were not eligible to contribute to the PSS or CSS superannuation schemes. Further, you are more than 16 years of age. Therefore, you were not a resident of Australia under the superannuation test during the period.

Relevant facts: You are a country A citizen. | You arrived in Australia some time ago on a working holiday visa. | You came to Australia to work and experience living here. | You plan on staying in Australia until a specific time in the near future. | You had a job for a few weeks, then a new job working for a company for several months. | You stayed in hostel accommodation, in every X weeks when you returned from your work. You consider one state to be your home base. | You have moved from one state to another state and lived with a friend there. | While living with your friend you spent your time looking for a new job and then took a holiday. | You obtained a job in another state and live in accommodation provided by your employer. | You have a bank account and a motor vehicle in Australia. | You have a bank account in country A. | You were renting a room in country A which you no longer rent. You do not have a permanent place to live outside Australia. | You returned to country A to visit your parents. | You have never been a Commonwealth Government of Australia employee. | You are over 16 years of age.