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Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes?

Yes

This ruling applies for the following period:

Year ended 30 June 2012

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You are a citizen of Country B.

You do not hold an Australian passport.

You were employed by an Australian company.

You were seconded to work in Country A for a short period.

During your employment in Country A you had tax withheld from your earnings.

You returned once to Australia during your employment in Country A. This was partly for recreation purposes and partly to check on your house.

Your assets in Australia include a house that was vacant, and a bank account.

You have assets in Country B but not in Country A.

You lived in accommodation provided by your employer in Country A

Your spouse stayed with you during your employment in Country A.

You do not have any social or sporting connections in Country A.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection6(1).

Income Tax Assessment Act 1997 Section 6-5.

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

Reasons for decision

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 terms resident and resident of Australia are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The definition provides a series of tests to ascertain whether a person is a resident of Australia.

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 dictionary definition, is to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place.

Relevant factors to be considered in determining residency would include whether the person is accompanied by his or her family overseas, whether a place of abode is maintained outside Australia, the extent to which any assets or bank accounts are acquired or maintained in and outside Australia.

In deciding whether a person is residing in Australia the weight to be given to each factor will, of course, vary with the individual circumstances. No single factor is necessarily decisive. Rather, the factors, taken together, are pointers which help to determine whether a person resides in Australia. The factors are as follows:

In your case you went to Country A to work. Although you lived in Country A with your family for a short period you were staying in rented accommodation provided by your employer. You had no social or sporting links with Country A, nor any assets there. In Australia you have a bank account and a house that has been vacant for the entire period you were overseas.

You meet the conditions to be considered a resident of Australia for tax purposes under the resides test.

As it has been established that you are a resident of Australia for tax purposes under the resides test, it is not necessary to consider the other tests

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