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Edited version of private ruling

Authorisation Number: 1011470289643

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Ruling

Subject: Residency status

Question 1

Are you an Australian resident for tax purposes from the date of your arrival?

Answer

Yes.

Question 2

Do you also satisfy the requirements of being a temporary resident of Australia for tax purposes from the date of your arrival until the date you were granted permanent residency?

Answer

Yes.

This ruling applies for the following periods

Year ended 30 June 2009

Year ended 30 June 2010

The scheme commenced on

1 July 2008

Relevant facts and circumstances

You and your spouse arrived in Australia on a visa granted under the Migration Act 1958.

The conditions of your visa required you and your spouse to depart Australia and then come back to Australia.

You and your spouse applied for permanent residency in Australia while you were in Country A.

Your and your spouse's permanent residency was granted.

You and your spouse sold your home in Country A and purchased a home in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 995-1(1)

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

Residency

An Australian resident is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is 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 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. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established.

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.

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.

Paragraph 62 of TR 98/17 provides that a visit to Australia of less than six months is not sufficient time to be regarded as residing here. When determining whether individuals are residing here, if their visit is for six months or more, the Commissioner considers their behaviour while in Australia.

Further, paragraph 16 of TR 98/17 provides that a migrant who comes to Australia intending to reside here permanently is a resident from arrival.

In your case:

Based on the information you have provided, it is considered that you are an Australian resident for tax purposes from the date of your arrival as your behaviour in Australia reflects a degree of continuity, routine or habit that is consistent with residing here.

Temporary residents

Subsection 995-1(1) of ITAA 1997 provides that a taxpayer is a temporary resident if:

Under the Social Security Act 1991, an Australian resident is a person who resides in Australia and is either an Australian citizen or holds a permanent resident visa.

In your case, you held a visa granted under the Migration Act 1958.

You were neither an Australian citizen nor a permanent resident visa holder until you were granted permanent residency.

Your spouse was neither an Australian citizen nor a permanent resident visa holder until your spouse was granted permanent residency.

Therefore, you were a temporary resident from the date of your arrival until the date you were granted permanent residency as you were not an Australian resident within the meaning of the Social Security Act 1991.

Consequently, under subsection 995-1(1) of the ITAA 1997 you are an Australian resident for taxation purposes from the date of your arrival who also qualified as a temporary resident from the date of your arrival until the date when your permanent residency was granted.

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