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This edited version has been archived due to the length of time since original publication.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: 1012360038473

Ruling

Subject: Residency

Questions and answers

Are you a resident of Australia for taxation purposes?

No

This ruling applies for the following period

Year ended 30 June 2012

The scheme commenced on

1 July 2011

Relevant facts and circumstances

You are citizens of country A

Your country of origin is Country A

It is your intention to live permanently in Australia.

You have stayed with your spouse at their premises on each occasion you have visited Australia.

You have savings and term deposit accounts in Australia

You have a home in Country A. It is not being rented out.

Relevant legislative provisions

Income Tax Assessment Act 1936 6(1).

Income Tax Assessment Act 1997 Section 6-5.

Section 18 of the Income Tax Rates Act 1986.

Reasons for decision

Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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 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 an Australian resident for tax purposes if they satisfy the conditions of one of the three other 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'.

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.

You do not meet the resides test, as you have not yet dwelt in Australia permanently or for a considerable period of time.

The domicile test

If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

In order to show that a new domicile of choice in a country outside Australia has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country.

The expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. In essence, a person's place of abode is that person's dwelling place or the physical surroundings in which a person lives.

A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life.

You have taken steps to become a permanent resident of Australia and to live here, therefore your domicile is Australia. However you have a permanent place of abode in Country A. You are not renting nor have you purchased a house in Australia.

The commissioner is not satisfied that you have established a permanent place of abode in Australia. You are not a resident under the domicile test

The 183-day test

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

This test does not apply to you as you have not been present in Australia for more than 183 days.

The superannuation test

An individual is still considered to be an Australian resident for tax purposes if that person is eligible to contribute to a Commonwealth superannuation scheme such as the PSS or the CSS, or that person is the spouse or child under 16 of such a person.

This test does not apply to your as you are not eligible to contribute to the PSS or the CSS.

Your residency status

In your case, you are not considered to be an Australian resident for tax purposes under any of the tests or residency outlined in subsection 6(1) of the ITAA 1936.

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