Private ruling: Residency
Published: December 2013
Ruling period: 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Question and answer | Are you an Australian resident for taxation purposes? | Yes

Relevant facts and circumstances: You are a citizen overseas. An overseas country is your country of origin. You are married to an Australian Citizen. You are on a Temporary Resident Visa. You work in overseas for an overseas company. Your salary is paid into an Australian bank account. You work on a rotation and are required to do mandatory training overseas during the year. This means that you are in Australia for less than half a year. The next time you depart Australia will be in 20YY. Your destination overseas was overseas for work and training overseas. Overseas you had a work visa. Your visa overseas does not allow you to stay permanently. You did not intend to reside overseas permanently. You plan to return to Australia in 20ZZ. You hold a return airline ticket and have provided a copy. You have returned to Australia throughout 20XX and 20YY financial years to stay in your home with you Australian spouse on temporary holiday and spousal visas. Overseas you live in a container provided by work, the camp's address that the containers are based in is overseas. You are accommodated there and have your own container which included an en suite bathroom. Overseas you have a Credit Card. When in Australia you live with your spouse. Your spouse lives in this home whilst you are away. Your assets in Australia are a joint bank account and a personal bank account. You do not have any household effects in Australia. You are not receiving any Australian sourced income. You are employed overseas by an overseas company; you started with them in 20WW and are still currently employed by them. You are employed on a permanent basis and have provided a copy of your employment contract. You have never had employment in Australia. No family accompanies you overseas. Your spouse is Australian and works in Australia. You do not have any social or sporting connections in Australia. Neither you nor your spouse were or are a Commonwealth Government of Australia employee for superannuation purposes. You are not eligible to be on the Australian Electoral Role. You have lodged tax returns overseas and provided copies.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 6-1 | Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 995 | Income Tax Assessment Act 1936 Subsection 6(1) | Social Security Act 1991

Reasons for decision: Summary: Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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 provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are: 1. the resides test 2. the domicile test 3. the 183 day test 4. the superannuation test The first two tests are examined in detail in Taxation Ruling IT 2650. 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. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests. | Detailed Reasoning - The resides 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'. Taxation Ruling TR 98/17 focuses on the quality and character of an individual's behaviour while in Australia (which includes, in addition to family and business ties, factors such as intention or purpose of presence, social and living arrangements, and maintenance and location of assets), in conjunction with the period of physical presence in Australia. Taxation Ruling IT 2650 emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia. In the recent case of Iyengar v FCT 2011 ATC 10-222, the Administrative Appeals Tribunal held that the taxpayer was a resident of Australia, even though he was working overseas. The taxpayer's family ties, his intention (to complete his contract) and motive (to pay off his mortgage), and his maintaining an Australian place of abode while working overseas, were all indicative that he was an Australian resident during the relevant period. In your case, you have ties to both Australia and overseas. Although you have financial and economic ties to an overseas country, your ties to Australia are stronger because your spouse resides in Australia, and you return to your home and spouse in Australia when you are not working. The main purpose of your presence in Australia is to be with your spouse, whereas the main purpose of your presence overseas is to work and train. This indicates that you are residing in Australia according to the ordinary meaning of resides. As you are residing in Australia, you are a resident of Australia under the resides test. It is therefore not necessary to consider whether you are a resident of Australia under any of the three statutory tests. | Detailed Reasoning - Temporary residency: Subdivision 768-R of the ITAA 1997 provides that where you meet the requirements to be a temporary resident of Australia you will be subject to the temporary resident rules prescribed by section 768-910 and section 768- 915 of the ITAA 1997. Section 768-910 provides that any income you derive from an overseas source will be non-assessable non-exempt income, except income earned from employment undertaken or services provided overseas while you are a temporary resident. Temporary resident is defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997), which prescribes three criteria: (a) You hold a temporary visa granted under the Migration Act 1958 (b) You are not an Australian resident within the meaning of the Social Security Act 1991 ; and (c) Your spouse is not an Australian resident within the meaning of the Social Security Act 1991 The Social Security Act 1991 defines an 'Australian resident' as a person who resides in Australia and is an Australian citizen, the holder of a permanent visa or a protected special category visa holder. You are not a temporary resident as your spouse is an Australian resident. | Detailed Reasoning - Your residency status: You are a resident of Australia for taxation purposes. As you are an Australian resident and the temporary residency provisions do not apply, you are required to declare your income both in and out of Australia in your Australian tax return. | Detailed Reasoning - Foreign Income Tax Offset: You may be eligible for tax offset for tax paid overseas. See our website ato.gov.au for more information.