Private ruling: Residency
Date of advice: 29 August 2016
Published: October 2016
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Were you an Australian resident for tax purposes under section 6(1) of the Income Tax Assessment Act 1936 ? | A1: Yes

Relevant facts and circumstances: Your country of origin is the overseas country. You are a citizen of the overseas country. You are not a citizen of any other country. You arrived in Australia on a working holiday visa. The purpose of your visit originally was to visit and work in Australia for a period of time. At a later date you were granted a visa which allowed you to stay permanently in Australia. Your intention is to live permanently in Australia and as at the time of the ruling application you have no plans to leave Australia. You have lived in a rented unit in Australia for the whole relevant period. You do not have a spouse or dependants. You do not own a home or any other assets overseas. You did not receive any income from sources outside of Australia. You obtained employment in Australia and have been in that same employment for the relevant period. You left Australia during the relevant period to visit your country of origin and other overseas countries for short periods of time. You lodged tax return in your country of origin in a previous financial year as you were only present in Australia for part of that financial year. You were not a Commonwealth of Australia Government employee for superannuation purposes.

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

Reasons for decision: Detailed Reasoning - Residency: 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: • 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. None of the other tests need be applied if the 'resides test' is satisfied. The ordinary meaning of the word 'reside', 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 Commissioner's view on the 'resides test' is contained in Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia . Paragraph 15 of TR 98/17 explains that the ordinary meaning of the word 'reside' is wide enough to encompass an individual who comes to Australia permanently (for example, a migrant) and an individual who is dwelling here for a considerable time. As a broad principle, where a person has a settled routine for six months or more (for example, the person has stayed in one place or has been with one employer for six months at the same location) then they will satisfy the, resides, test. In your case your original intention was to live and work in Australia for a short period of time. You then decided to stay for longer and you were granted a visa that allowed you to permanently reside in Australia. You have lived in your rental accommodation during the entire relevant period and you have been employed by the same employer during the whole relevant period. You have established a place of residence in Australia and have exhibited behaviour consistent with residing in Australia. You do not own any overseas assets or have foreign sourced income. Given your circumstances you are a resident of Australia for the financial year ended 30 June 2016. Therefore, as you have satisfied the 'resides test' of residency none of the other tests need be applied. | Detailed Reasoning - Income assessability: As you are a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income includes income gained from all sources, whether in or out of Australia, subject to the temporary resident rules. | Detailed Reasoning - Temporary resident rules: Where you are a resident of Australia for tax purposes and also meet the requirements to be a temporary resident, your foreign income (including capital gains) is not taxed in Australia apart from income from work you do overseas while you are a temporary resident. Section 995-1 of the ITAA 1997 states that you are a temporary resident if: • you hold a temporary visa granted under the Migration Act 1958 ; • you are not an Australian resident within the meaning of the Social Security Act 1991 ; and • your spouse is not an Australian resident within the meaning of the Social Security Act 1991 . The Migration Act 1958 provides that a temporary visa is a visa to travel to and remain in Australia: • during a specified period • until a specified event happens, or • while the holder has a specified status. Temporary visas are distinguished from permanent visas which allow a person to remain in Australia indefinitely. Under the Social Security Act 1991 , an Australian resident is generally a person who resides in Australia and is either an Australian citizen or the holder of a permanent resident visa. In your case, you obtained a permanent visa part way through an income tax year. You are an Australian resident within the meaning of the Social Security Act 1991 as you hold a permanent resident visa. Prior to obtaining the permanent visa you held a temporary visa and met the definition of a temporary resident. Therefore, you ceased being a temporary resident from the day you were granted your permanent visa and you will pay tax in Australia on your worldwide income from that time. Other exemptions provided to temporary residents will no longer be available to you.