Private ruling: Residency
Published: June 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 tax purposes whilst you were in Australia? | Yes.

Relevant facts and circumstances: You are a citizen of Country X. You were living in Country X on a permanent basis before you came to Australia. You arrived in Australia in 2013 on a one way ticket to Australia. Your Country X passport allowed you to enter Australia. You have not applied for permanent residency since you arrived. The purpose of your visit in Australia was to live and work in Australia indefinitely. You obtained an Australian drivers licence. You had sold all assets and closed all bank accounts in Country X and quit your job there. Due to family issues you unexpectedly returned to Country X in 2013.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1936 Subsection 6(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, and · 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 considered to 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', according to the Macquarie Dictionary , 2001, rev. 3 rd 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 Income Tax: residency status of individuals entering Australia emphasises the quality and character of an individual's behaviour while in Australia assists in determining whether the individual resides here. All the facts and circumstances that describe an individual's behaviour in Australia are relevant. In particular, the following factors are useful in describing the quality and character of an individual's behaviour: · intention or purpose of presence · family and business/employment ties · maintenance and location of assets, and · social and living arrangements. No single factor is necessarily decisive and many are interrelated. The weight given to each factor varies depending on individual circumstances. In your case you came to Australia in 2013 on a one way ticket. You intended to stay here permanently. You sold your assets in Country X, closed bank accounts and left your employment there. You worked in Australia and obtained an Australian drivers licence. You were required to return to Country X unexpectedly in 2013 due to family issues. Therefore you were a resident of Australia under this test during your stay here. As you are a resident under this test, it is not necessary to determine whether you meet the requirements of the other three tests of residency. | Detailed Reasoning - Your residency status: As you meet the resides test, you are a resident of Australia for tax purposes. 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.