Private ruling: Residency
Published: April 2013
Ruling period: Year ended 30 June 2005 | Year ended 30 June 2006 | Year ended 30 June 2007 | Year ended 30 June 2008 | Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2005

Ruling: Questions and answers | Are you a resident of Australia for taxation purposes prior to you receiving permanent residency? | No | Are you a resident of Australia for taxation purposes prior to you receiving permanent residency? | Yes

Relevant facts and circumstances: You are a citizen of both the Country B and Australia. You do not own any real property in any country. Prior to obtaining permanent residency you entered Australia on a visitor's visa. Your contracts are obtained through a labour hire company. Your personal effects have been stored in Country B since you started working internationally. You have been bringing your personal effects to Australia. You had no Australian sourced income for those years. During the 200X financial year you worked on a project in country A on a rotational basis. You would enter on a work visa and accommodation was supplied by your employer. You were contracting via a Country B based company. Your income was being received in Country B. You met your spouse while on a holiday to Australia. You were married in Australia. Your spouse was residing in a house they owned in Australia at the time. Your spouse does not work nor do they lodge tax returns. You worked on a project in Country A on a rotational basis. You would enter Country A on a work visa and accommodation was supplied by your employer. Your contract in Country A expired in 200Y. You returned to Country B in order to obtain a working visa. You contacted the Australian immigration advisory service for guidance in applying for a permanent residency visa. You were granted a permanent residency visa. Neither you nor your spouse is or has been a contributing member of an Australian government superannuation scheme.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection6(1). | Income Tax Assessment Act 1997 Section 6-5. | Income Tax assessment Act 1997. Subsection 995-1(1)

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 resides. 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'. 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. You do not meet the resides test as you have not yet dwelt in Australia permanently or for a considerable period of time. | Detailed Reasoning - The domicile test: If a person is has their domicile in Australia they will be d an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia. Domicile is a legal concept to be determined according to the Domicile Act 1982 and to thee common law rules which the courts have developed in the field of private international law. The primary common law rule is that a person acquires at birth a domicile of origin, being the country of his or her father's permanent home. You were a country B citizen who had a working holiday visa to enter Australia for work purposes. You did not apply for permanent residency of Australia. You have retained your domicile of birth. You do not have an Australian domicile. As you do not have an Australian domicile, you are not a resident of Australia for tax purposes under this test. | Detailed Reasoning - The 183-day test: You did not spend more than 183 days in Australia in any of the years prior to the relevant year. You are not a resident of Australia under this test. | Detailed Reasoning - The superannuation test: An individual is still an Australian resident for tax purposes if that person is eligible to contribute to a Commonwealth superannuation scheme such as the PSS or the CSS, or that person is the spouse or child under 16 of such a person. This test does not apply to you as you and your spouse are not eligible to contribute to the PSS or the CSS. | Detailed Reasoning - Your residency status: In your case, you are an Australian resident for tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 for the relevant financial years. | 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'. 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. You do not meet the resides test as you have not lived in Australia although you do have an Australian permanent residency visa. | Detailed Reasoning - The domicile test: If a person has 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. In Mid 20ZZ you took action to make Australia your domicile of choice by commencing to become a permanent resident of Australia. As your domicile has become Australia the Commissioner must consider if you have a permanent place of abode outside Australia. While working you live in employer provided accommodation. Between contracts and at some other time you live with your wife in Australia. The Commissioner is not satisfied you have a place of abode outside Australia. Therefore you are a resident of Australia for taxation purposes from mid 20ZZ under the domicile test and the remaining tests do not need to be considered.