ATO Interpretative Decision

ATO ID 2002/216

Income Tax

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the taxpayer's income assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) as a resident of Australia?

Decision

Yes. The taxpayer is a resident of Australia for income tax purposes and ordinary income derived by the taxpayer is assessable under subsection 6-5(2) of the ITAA 1997.

Facts

The taxpayer received salary and wages during the year of income.

The taxpayer lived with a partner on a genuine domestic basis for the whole of the income year. This included being named on a lease of property.

The taxpayer was present in Australia for 300 days in the income year.

The taxpayer travelled to Europe for 65 days in the income year to visit friends and family. The taxpayer has continued to reside in Australia since their return and is applying for permanent residency.

Reasons for Decision

Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.

Salary and wages are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.

The term 'Australian resident' is defined in section 995-1 of the ITAA 1997 and means a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

Subsection 6(1) of the ITAA 1936 contains the definition of 'resident' which states that a person may be a resident of Australia where:

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they reside in Australia; or

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have their domicile in Australia; or

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have been in Australia continuously or intermittently during more than half of the income year, unless the Commissioner is satisfied that their usual place of abode is outside Australia and they do not intend to take up residency.

If a taxpayer is considered to reside in Australia under the first test the other tests do not need to be considered.

The term 'reside' is not defined in either the ITAA 1936 or ITAA 1997. Taxation Ruling TR 98/17 provides the Commissioner's interpretation of the ordinary meaning of the word 'reside'. TR 98/17 provides that individuals who enter Australia and extend their stay beyond 6 months are regarded as residents from the time of their arrival, as long as their intention and presence has an habitual and routine character during the entire period.

The taxpayer has established permanent ties with Australia through their taking on a lease of property, and developing a permanent relationship here. The taxpayer's application for permanent residency and the length of time they were present in Australia during the year of income also indicate that the taxpayer is a resident of Australia for income tax purposes.

The taxpayer is considered to reside in Australia and is therefore considered a resident of Australia for income tax purposes under subsection 6(1) of the ITAA 1936. Accordingly, the taxpayer's salary and wages will be included in the taxpayer's assessable income under subsection 6-5(2) of the ITAA 1997.

Year of income:  Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1936
   subsection 6(1)

Keywords
Residence in Australia
Residence of individuals
Domicile tests

Siebel/TDMS Reference Number:  DW329683

Business Line:  Small Business/Individual Taxpayers

Date of publication:  28 February 2002

ISSN: 1445-2782