Private ruling: Residency for tax purposes
Date of advice: 24 October 2017
Published: March 2018
Ruling period: Year ending 30 June 2016
Date scheme commenced: 1 July 2016

Ruling: Q1: Were you a Resident of Australia for tax purposes for the income year ending 30 June 20XX. | A1: Yes

Relevant facts and circumstances: You entered Australia with your spouse in late in the year with the intention to remain in Australia for a year on a Working Holiday Visa You found ongoing accommodation a week after your arrival. You obtained employment some time later. You purchased furnishings for the apartment. You established several ties to the community via bank accounts, mobile phone plans and gym and church membership. Due to your financial situation you left Australia early in the next year.

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

Reasons for decision: Summary: Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: ● the resides test, ● the domicile test, ● the 183 day test, and ● the superannuation test. The primary test for deciding the residency status of each individual is whether they reside 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. Where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident if they meet the conditions of one of the other tests. | Detailed Reasoning - The resides (ordinary concepts) 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'. 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. In your case: ● You and your spouse entered Australia with the intention of residing here for a year. ● You lived primarily in a single residence which you furnished. ● You have family ties to the Australian community. ● You exhibited the normal habits and “mode of life” of a person residing in Australia rather than behaviour indicative of being a tourist. Based on these facts, it is evident that you did establish enough of a connection with Australia to establish that you were a resident. Consequently you were residing in Australia according to the ordinary meaning of the word. Therefore, you meet the ‘resides test’ and are a resident of Australia for tax purposes. | Detailed Reasoning - Your residency status: As you will be a resident under the ‘resides test’ there is no need to consider the remaining three tests, and you are a resident of Australia for income tax purposes under subsection 6(1) of the ITAA 1936.

The advice in the Register has been edited and may not contain all the factual details relevant to each decision. Do not use the Register to predict ATO policy or decisions.