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This edited version has been archived due to the length of time since original publication.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: 1012413164771

Ruling

Subject: Residency

Question:

Were you a resident of Australia for taxation purposes during the 2011-12 financial year?

Answer:

Yes.

This ruling applies for the following period:

Year ended 30 June 2012

The scheme commenced on:

1 July 2011

Relevant facts

You were born in and are a citizen of Country A.

You arrived in Australia on a 457 visa to take up an employment contract.

You left to go back to your home country and stayed there for over six months.

You have returned to Australia to commence a new work contract.

Your spouse accompanied you to Australia on both occasions.

You rented an apartment for the period you were in Australia.

Your current contract can be extended.

Both your previous and current contracts are full-time.

You intend to apply for permanent residency in Australia.

You have bank accounts in Australia.

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  

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 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. 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 definition is wide enough to encompass an individual who comes to Australia permanently, such as a migrant, and an individual who is dwelling here for a considerable time.

A migrant who comes to Australia to reside here permanently is a resident from arrival. When an individual arrives in Australia not intending to reside here permanently, all the facts about his or her presence must be considered in determining their residency status.

The period of physical presence or length of time In Australia is not by itself decisive when determining whether an individual resides here. 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.

Whether a considerable time has elapsed to demonstrate that the individual's behaviour has the required continuity, routine or habit is a question of fact; that is, it depends on the circumstances of each case. The Commissioner's view on the residency status of individuals entering Australia is contained in Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia. Paragraph 22 of TR 98/17 states that a period of six months is a considerable time when deciding whether the individual's behaviour is consistent with residing here.

In your case:


Paragraph 55 of TR 98/17 states:

Your circumstances are similar to example 11 in TR 98/17. Therefore the Commissioner is satisfied that your behaviour during the 2011-12 financial year reflected a degree of continuity, routine or habit that is consistent with residing in Australia.

You are a resident under this test.

As you satisfy the resides test it is not necessary to look at the remaining tests.

Your residency status

You were a resident of Australia for taxation purposes for the 2011-12 financial year.

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