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This edited version has been archived due to the length of time since original publication.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

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012564033887

Ruling

Subject: residency

Questions and answers:

Yes.

Yes.

This ruling applies for the following periods:

Year ending 30 June 2013

The scheme commenced on:

1 July 2012

Relevant facts and circumstances

You were born in Country Y and are a citizen of country y.

You came to Australia on a visa. Prior to coming to Australia, you lived in County Y and Country Z.

You intend on being in Australia for the duration of your visa except for a couple of short visits overseas.

You work for an overseas country employer.

You carry out this work from your apartment in Australia.

You have a joint bank account in Australia with your spouse.

You have a joint bank account in Country Y and registered and non-registered investments in Country Y.

You play sport for a team in Australia.

You played sport in Country Y until you left.

You have left Australia for a short period since leaving for work purposes.

You and your spouse live in rented accommodation in Australia.

You do not have a permanent home in country Y.

Neither you nor your spouse are currently or have ever been Commonwealth government employees.

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

The terms 'resident' and 'resident of Australia', in regard to an individual, are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (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 a resident of Australia for tax purposes if they meet the conditions of one of the other three tests.

 The resides (ordinary concepts) test

The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word 'resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test.

Generally the Commissioner regards six months or 183 days as a considerable time when deciding an individual's behaviour is consistent with residing here. The Commissioner is also of the view 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.

Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test:

These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in Taxation Ruling TR 98/17 residency status of individuals who enter Australia and Taxation Ruling IT 2650 residency status of individuals who temporarily live outside Australia.

It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

(i) Physical presence in Australia

A person does not necessarily cease to be a resident because he or she is physically absent from Australia.

In relation to this the AAT has stated that:

You came to Australia on a visa.

You work from your apartment in Australia.

You have left Australia for a short period for work purposes since arriving in Australia in a later income year.

(ii) Nationality

The nationality of a person is rarely a decisive factor in deciding whether or not a person resides in a location, however it is one factor that is considered along with all of the circumstances of each case.

You are a citizen of Country Y and you were born in Country Y.

(iii) History of residence

You lived and worked in Country Y and Country Z prior to coming to Australia.

(iv) Habits and "mode of life"

The Commissioner regards a person's habits and daily routines in regard to their domestic and business arrangements as strongly indicative of residency status. This is particularly relevant to determining the residency of a person who enters Australia, but is also relevant in assisting to determine the residency status of a person who

You live with your spouse in a rented apartment in Australia. You work from the apartment for an overseas company. You have an Australian joint bank account with your spouse.

(v) Frequency, regularity and duration of visits to Australia

Where a person is living in a country and visits another, the frequency and regularity of their visits is an important factor to be considered in determining whether or not they are resident in that other country.

Case law has shown that a taxpayer can be a resident of a country even if they only spend a short period of time in that country, for example the AAT found a taxpayer to reside in Australia despite the fact that he had only been present in Australia in the relevant income year for separate periods of only two weeks, three weeks and two and half weeks. A further decision found a taxpayer who had only been present in Australia for two separate periods of two weeks and ten days during a period of two years and seven months to be residing in Australia.

You have been living and working in Australia since first arriving in Australia.

You have left Australia for two short periods since first arriving (both in later income years than the period of the ruling).

(vi) Purpose of visits to or absences from Australia

As discussed above you have left Australia for work purposes, and a planned short visit overseas since arriving. You did not leave Australia during the income year that is the subject of the ruling.

(vii) Family and business ties to Australia and the overseas country or countries

Case law has established that the family or business ties that an individual retains with a country are relevant in determining whether an individual has remained or ceased to be a resident.

Family

Your spouse lives with you in Australia.

Business or economic ties

You work for an overseas company. You carry this work out from your apartment in Australia.

Assets

You have a joint bank account and some investments in Country Y.

You have a bank account and personal items in Australia

(viii) Maintenance of Place of abode

The maintenance of a place of abode in Australia is an important factor when considering the residency status of a taxpayer.

You live in rented accommodation in Australia.

Summary

As stated above it is important that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

There are several factors outlined above which indicate that you are a resident of Australia. Specifically;

· You work from your apartment in Australia

· You expect to be in Australia for more than a couple of years

· You have been living and working in Australia with your spouse.

Based on a consideration of all of the factors outlined above you are a resident of Australia according to ordinary concepts as you maintain a continuity of association with Australia for the relevant period. Your behaviour along with your continuity, routine and habit is consistent with someone who is residing in Australia.

Assessability of Income

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 ordinary income gained from all sources, whether in or out of Australia. 

You are assessable on your ordinary income regardless of source as you are a resident of Australia for tax purposes. This includes the income you derive from your employment. This income must be declared in your Australian tax return.

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