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This edited version has been archived due to the length of time since original publication.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: 1012378761812

Ruling

Subject: Residency for tax purposes

Question and answer

Were you a resident of Australia for taxation purposes from when you arrived in Australia until you left?

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 a citizen and were born in an overseas country.

You came to Australia on a working holiday.

You were in Australia for less than 6 months.

You had a work visa.

You rented a bedroom in a two bedroom house while you were in Australia.

You own your own home overseas.

You had a temporary work contract which was extended a couple of times.

You worked for the same employer for a number of months and then got a days work here and there with other employers.

Relevant legislative provisions:

Income Tax Assessment Act 1936 Subsection 6(1).

Income tax Assessment Act 1997 Section 6-5.

Income Tax Assessment Act 1997 Subsection 995-1(1).

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) advises that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non-resident of Australia for taxation purposes, your assessable income includes only income from an Australian source.

Subsection 995-1(1) of the 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 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'.

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.

You were in Australia for less than 6 months.

You lived in a house where you rented a room.

You worked for a few months with the same employer on a temporary contract.

You did not reside in Australia as your behaviour in Australia does not reflect a degree of continuity, routine or habit that is consistent with residing in Australia.

Domicile test

If a taxpayer has 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 of your Country of birth has been adopted, the person must be able to prove an intention to make his or her home indefinitely in another country.

In your case you were born overseas and you are a citizen of an overseas country..

You have not taken any steps to change your domicile

Your domicile is not Australia.

You are not a resident under this test.

183 day test

A taxpayer is considered a resident if they are in Australia for more than 183 days of an income year, 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.

Based on the information provided to us you were in Australia for approximately 4 and a half months. Therefore the test does not apply and you are not a resident under this test.

Superannuation test

This test is not relevant in your situation as it applies to persons eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or you are the spouse or child under 16 of such a person.

Your residency status

For the period you were in Australia on a working holiday you were not a resident of Australia for taxation purposes. You are to be taxed at the non-resident tax rates.

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