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

Ruling: Question and answer | Were you a resident of Australia for taxation purposes for the 2013 income year? | No.

Relevant facts and circumstances: You are a citizen of Country Y and you were born in Country Y. You are not a resident or citizen of Australia or any other country. You came to Australia on a student visa and later obtained a work visa. The work visa was for 12 months. You intended to leave Australia. You met your partner while in Australia. You moved in with your partner and lived in their house. You lived with your partner at the same address for a number of months. You returned to Country Y. You stayed with your family for a period of time in Country Y. Your spouse joined you in Country Y and you now rent a unit together in Country Y. You have been employed in Country Y since XXXX. Your spouse is a full-time student in Australia. You intend on returning to Australia with your partner. Neither you nor your spouse are currently or have ever been Commonwealth Government employees.

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

Reasons for decision: Detailed Reasoning - Residency: 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 . The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the: • resides test; • domicile and permanent place of abode test; • 183 day test; and • Commonwealth superannuation fund 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. | Detailed Reasoning - The resides (ordinary concepts) test: The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word ' resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test. 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. You are a citizen of Country Y and you were born in Country Y. You are not a permanent resident or citizen of any other country. You came to Australia on a student visa and then obtained a work visa when the student visa expired. The student visa was for 12 months you intended to leave Australia in XXXX. You were required to go back to Country Y. Initially you lived with your family upon your return to Country Y , and when your spouse joined you in Country Y you commenced renting a unit together in Country Y . You have been employed in Country Y since XXXX. You were physically present in Australia for less than X months of the XXXX income year. You did not maintain a home in Australia. Based on the facts above you did were not residing in Australia according to ordinary concepts for the XXXX income year. | Detailed Reasoning - The domicile test: If a person has their domicile in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. Your domicile of origin is Country Y. You are not a permanent resident or citizen of any other country. Therefore your domicile is not Australia and you are not a resident under this test. | 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. You were not in Australia for more than 183 days in the XXXX income year. You are not a resident under this test. | Detailed Reasoning - The superannuation test: An individual is still 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 or your spouse have never been Commonwealth Government employees. You are not a resident under this test. | Detailed Reasoning - Your residency status: You were not a resident of Australia for taxation purposes for the XXXX income year.