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Edited version of private ruling

Authorisation Number: 1011712857541

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Ruling

Subject: Residency for tax purposes

Question and answer:

Are you a resident of Australia for tax purposes?

Yes.

This ruling applies for the following period:

Year ending 30 June 2010

The scheme commenced on:

1 July 2009

Relevant facts and circumstances

Your country of origin is Country X.

You are a citizen of Country X.

You own a home in Country X where you live while you are in Country X.

You work in Country X.

The total time you spent in Country X during the year was approximately three-quarters of the year.

You are a permanent resident of Australia.

You own a home in Australia where you live while you are in Country X.

Your spouse and children live in Australia.

During the year, you travelled to Australia a few times.

The time you spent in Australia during these trips was one to two weeks each time.

The total time you spent in Australia during the year was approximately one-quarter of the year.

You travelled to Australia in order to spend time with your family.

In the income year you were in an export business partnership with your wife.

Other than your partnership, you have no other income in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

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 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 meet the conditions of one of the other three tests.

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'.

Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are:

Taxation Ruling IT 2650 emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia.

In your case we consider that you reside in Australia for the following reasons:

You are a permanent resident of Australia

You had an Australian business during the income year

Your spouse and children live in Australia

You have a home that you own and live in with your spouse in Australia

Although you also have significant ties to Country X, that is, you work there and have a home there, your ties to Australia are greater. For this reason you are a resident of Australia under this test.

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. 

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