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

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

Relevant facts and circumstances: Your country of origin is a foreign country. You are a citizen of a foreign country. In the five years prior to your arrival in Australia you lived in a foreign country only. You arrived in Australia on XXXX and returned to a foreign country on XXXX. You were in Australia for XXXX days. You entered Australia on a temporary student visa. The visa grant date is XXXX and expiry date is XXXX. You have not applied for a visa extension beyond its end date. You are studying on an exchange program. Since your arrival in Australia, you have not you applied for permanent residency. You came to Australia for the purposes of study and do not intend to reside in Australia permanently. Your course of study in Australia was less than six months long. Prior to your arrival in Australia, you have not previously entered Australia. You lived in XXXX. You rented this house with five friends. During your time in Australia you lived in the same place and did not go back a foreign country. You have no assets in Australia. In a foreign country, you have a permanent place to live in your parents' house. You have no assets in a foreign country. You are not receiving income from non-Australian sources. You had paid employment in Australia. You do not have a position or job being held for you in a foreign country. You were a resident of a foreign country for tax purposes during your stay in Australia. In a foreign country you have parents and relatives. None of your family accompanied you to Australia. They live and work in a foreign country. You do not have any sporting connections in a foreign country. You don't have any social and sporting connections in Australia. You have never been a Commonwealth of Australia Government employee for superannuation purposes. After your return to a foreign country, you received a final payment from your Australian employer. You have asked if it should be declared your tax return for in an income year.

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

Reasons for decision: Summary: 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 (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 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 a resident of Australia for tax purposes if they meet the conditions of one of the other three tests. | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside' is to dwell permanently or for a considerable time or to have one's settled or usual abode in or at a particular place. You arrived in Australia on XXXX and returned to a foreign country on XXXX. You entered Australia on a visa in order to studying on an exchange program. While her you lived in rented accommodation. You lived with your parents before you came to Australia and you returned to line with them when you departed Australia. As you were only living and working in Australia between XXXX and XXXX you were not residing in Australia according to ordinary concepts. | 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. You are a citizen of a foreign country and you were born in a foreign country therefore, your domicile of origin is a foreign country. 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. You lived with your parents before and after your time in Australia. While in Australia, you lived in rented accommodation. Based on these facts, you retained a permanent place of abode in a foreign country during the period you were in Australia. | Detailed Reasoning - The 183-day test: You arrived in Australia on XXXX and returned to a foreign country on XXXX. You were in Australia for XXXX days. As you were not in Australia for 183 days or more in the year ended 30 June 2013 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 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. Only Commonwealth Government employees are eligible to contribute to the PSS and CSS. As you were not a Commonwealth Government of Australia employee you are not a resident under this test. | Detailed Reasoning - Your residency status: You were not a resident for tax purposes under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936 for the period. Therefore, you were not considered to be an Australian resident for the income year ended 30 June 2013. | Detailed Reasoning - Assessable income of a non-resident: Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a non-resident of Australia includes ordinary income derived in Australia during the income year. In your case, the income derived in Australia would include payments received from your Australian employer, XXXX. After your return to a foreign country, you received a final payment from your Australian employer. You have asked if it should be declared on your XXXX tax return or your XXXX tax return. Income is declared in the income year in which it is received. As you received the final payment in XXXX, you will need to declare in the income tax return for the year ended XXXX.