Private ruling: Residency
Date of advice: 26 May 2016
Published: July 2016
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you a resident of Australia for tax purposes for the income year ended 30 June 2016? | A1: No

Relevant facts and circumstances: You are a citizen of Country Y. You are not a citizen or permanent resident of any other country. You are in Australia on a working holiday visa. Your visa allowed you to stay in Australia for a period of 12 months. Your visa did not allow you to stay permanently in Australia. You did not intend on staying in Australia on a permanent basis. Whilst you have been in Australia you have been living in one location. You have not left Australia since you arrived for any part of your stay. You have opened an Australian bank account. You have joined your local library. You have also obtained a tax file number. You have had a permanent address whilst you have been living in Australia. You plan to return to Country Y after a period of 5.5 months. You lived with your parents in Country Y, and you do not have another permanent place of residence there. Your assets in Country Y consist of a bank account. You are employed on a casual basis by Company X. You were not employed by the Commonwealth Government of Australia. Your family lives in Country Y and did not accompany you to Australia.

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

Reasons for decision: Summary: An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is a resident of Australia for the purposes 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: • the resides test • the domicile test • the 183 day test • 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 a resident of Australia for tax purposes if they satisfy 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. 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 considers the residency status of individuals entering Australia and states that the period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here, but it is an important factor when considering whether an individual resides here. In most cases, the Commissioner accepts that a visit to Australia of less than six months is not sufficient time to be regarded as residing here. However, an individual's behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here. In your case, although you have established some social connections in Australia, after due consideration of all other factors, it is considered that you are not an Australian resident for tax purposes under the resides test for the following reasons: • you came to Australia on a working holiday visa • you did not intend on being in Australia on a permanent basis • your visa does not allow you to remain in Australia permanently • you are a citizen of Country Y • you are employed on a casual basis • you have no assets in Australia other than a bank account • you have a bank account in Country Y where you lived with your parents • you plan to stay in Australia for less than six months Based on the information you have provided, it is considered that you are not an Australian resident for tax purposes. Your behaviour in Australia does not reflect the sustained degree of continuity, routine or habit that is consistent with residing here under the resides test, particularly due to the short duration of your stay. | Detailed Reasoning - The domicile test: If a person is considered to have 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 order to show that an individual's domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country. In your case, it is considered that your domicile is still in your country of origin, as you will return there permanently. 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. A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. An intention to return to Australia in the foreseeable future to live does not prevent the taxpayer; in the meantime, setting up a permanent place of abode elsewhere, such as, if you were to move back to your parent's place or lease a property in your country of origin. Although you maintained an association with Australia on many levels during your stay, your association with your country of origin is more significant as: • you are a citizen of Country Y • you will return to Country Y • you lived with your parents in Country Y • you are not a citizen or permanent resident of any other country Based on these facts, it is considered that you have not established a permanent place of abode in Australia. Consequently, you are not considered to be a resident of Australia under the domicile test. | Detailed Reasoning - The 183-day test: Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia. In your case, the entire length of your stay will not exceed 183 days; therefore, as you will not be in Australia for 183 days you do not meet the 183 day residency test. | Detailed Reasoning - The Superannuation test: An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Service Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally, Commonwealth Government employees are eligible to contribute to the PSS or CSS. You are not eligible to contribute to the relevant Commonwealth super fund. This test is not applicable to your circumstances. You are not a resident under this test. | Detailed Reasoning - Your residency status: As you are not deemed to be a resident of Australia under any of the tests of residency outlined in subsection 6(1) of the ITAA 1936, under subsection 995-1(1) of the ITAA 1997, you are not considered to be an Australian resident from the date of your arrival in Australia until your planned departure date.