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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012290118122

Ruling

Subject: Residency

Question 1 and answer:

Are you a resident of Australia for income tax purposes from early 2012 to 30 June 2012?

Yes.

Question 2 and answer:

Are you a resident of Australia for income tax purposes for the financial year ended 30 June 2013?

Yes.

This ruling applies for the following periods:

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You are a citizen of Australia and a permanent resident of Country X.

Your country of origin is Country X.

You have lived in Country X with your family for over 10 years.

You entered Australia with one of your children in early 2012.

The purpose of your visit to Australia was to assist your child complete educational requirements.

The remainder of your family remained living in the family home in Country X.

You intend to return to the family home in Country X in within two years.

You are working on a permanent full time basis during your stay in Australia.

You and your child are living in a house property you own during your stay in Australia.

Your have substantial assets in Australia.

Your have substantial assets in Country X.

You and your spouse are not employed by the Australian Commonwealth government.

Relevant legislative provisions

Income Tax Assessment Act 1936 - subsection 6(1)

Income Tax Assessment Act 1997 - section 6-5

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 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. None of the other tests need be applied if the 'resides test' is satisfied.

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 5th edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; have 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'.

The Commissioner's view on the resides test is contained in Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia (TR 98/17).

An individual may be considered a resident under the resides test if their behaviour while they are here is such that they exhibit a degree of continuity, routine or habit that is consistent with a person residing in Australia according to the ordinary meaning of the word 'reside'. Factors that can be taken into account when ascertaining the character of a person's behaviour include the intention or purpose of the individual's stay in Australia, presence of family in Australia, location of assets and social and living arrangements.

As a broad principle, where a person has a settled routine for six months or more (for example, the person has stayed in one place or has been with one employer for six months at the same location) they may satisfy the resides test. The period of time of the settled routine need not be confined to one financial year. As long as the pattern of behaviour is exhibited the individual may be regarded as being a resident from the time of their arrival.

In your case, we note that:

Based on the above, it is considered that you have established a settled routine in Australia. Although the remainder of your family is based in Country X and you have been living there for many years, your current circumstances and day to day activities are consistent with residing in Australia according to ordinary concepts.

Therefore, you have satisfied the resides test of residency and none of the other tests need be applied.

You are an Australian resident for income tax purposes from early 2012 to 30 June 2012, and the financial year ended 30 June 2013.

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