ATO Interpretative Decision
ATO ID 2002/188 (Withdrawn)
International tax
Assessability of ordinary income - Residency - applied to extend visa for further 2 yearsFOI status: may be released
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This ATO ID is withdrawn and the source of ATO view on this issue can be found in Taxation Ruling TR 98/17 Income tax: Residency status of individuals entering Australia.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
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 is a citizen of another country with a temporary Australian residence visa.
The taxpayer is contracted to work for an Australian employer for 12 months. The visa expires soon and the taxpayer is negotiating to extend the contract for a further two years. Their employer will supply the necessary sponsorship. The taxpayer has initiated the process with the Department of Immigration to extend their visa.
The taxpayer has taken out a loan for 5 years to purchase a car and has a twelve month lease on the rental property in which they live.
The taxpayer lived with their parents in the foreign country and has no other property or business interests there.
The taxpayer confirmed that the taxation authority in the other country regards them as a non resident for taxation purposes.
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 initiated the process with the Department of Immigration to extend their visa and is negotiating to extend their employment contract for a further two years. The taxpayer has regular employment and is negotiating to extend their contract. The taxpayer has opened a bank account in Australia and has entered into a 5 year loan for the purchase of a car. The taxpayer holds a lease for a residence in Australia for one year and has no other property or business interests in their country of citizenship.
The length of time the taxpayer has been in Australia and their behaviour during this period 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.
Date of decision: 28 February 2002Year of income: Year ended 30 June 2001
Legislative References:
Income Tax Assessment Act 1936
subsection 6(1)
subsection 6-5(2)
section 995-1
Related Public Rulings (including Determinations)
TR 98/17
Keywords
International tax
Residence in Australia
Resident/residency
Residency of individuals
ISSN: 1445-2782
| Date: | Version: | |
| 28 February 2002 | Original statement | |
| You are here | 30 April 2010 | Archived |