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Edited version of private ruling

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Ruling

Subject: Residency - Arrival in Australia

Question and answer

Are you a resident of Australia for tax purposes?

Yes

This ruling applies for the following periods

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commenced on

1 July 2010

Relevant facts and circumstances

You are a citizen of a country other than Australia.

Your country of origin is a country other than Australia.

You arrived in Australia in the 2011 financial year.

You hold a Working Holiday Visa. This allows you to stay in Australia for 12 months from the date you arrived in Australia.

The purpose for your visit to Australia is to find employment.

You would like to live in Australia permanently.

You will be eligible to apply for a second Working Holiday Visa if you continue to work in Australia.

You are currently working at a property and live in accommodation on the property provided by your employer and pay a small amount of rent which is deducted from your salary.

You have an Australian bank account.

You do not own any property in your country of origin. Prior to moving to Australia you lived at a relative's house.

A condition of your work visa is that you do not work for the same employee for more than 6 months.

You have no family members in Australia.

You have no sporting or social connections in Australia at this stage.

You have no sporting or social connections in your country of origin.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 6-5(2),

Income Tax Assessment Act 1997 Subsection 6-5(3) and

Income Tax Assessment Act 1997 Subsection 6(1).

Reasons for decision

Residency Status

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 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 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.

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 Income Tax: residency status of individuals entering Australia 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.

The following factors are useful in describing the quality and character of an individuals behaviour:

In your case, although you have stated you would like to reside in Australia permanently, after due consideration of all other factors, your behaviour indicates that you are not residing in Australia under the resides test. The factors that indicate that you do not reside in Australia are:

Based on the information you have provided, it is considered that your behaviour in Australia does not reflect a degree of continuity, routine or habit that is consistent with residing in Australia.

As you do not meet the resides test, we will need to consider whether you meet any of the other three tests of residency.

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 persons usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

TR 98/17 states that there may be situations where an individual does not reside in Australia during a particular year but is present in Australia for more than one-half of the income year (perhaps intermittently) and intends to take up residence in Australia.

It is considered that you will be a resident of Australia under the 183 day test because of the following factors:

Conclusion

Based on the information you have provided, it is considered that you are an Australian resident for tax purposes from the date of arrival in Australia as you meet the 183 day test. Therefore, your assessable income includes income you derived directly or indirectly from all sources, whether in or out of Australia during the income year.

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