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This edited version has been archived due to the length of time since original publication.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

Authorisation Number: 1051249910395

Date of advice: 11 July 2017

Ruling

Subject: Residency

Question 1

Are you a resident of Australia for income tax purposes?

Answer:

Yes.

Question 2

Are you a resident only of Australia under Article 4 (1) of the Double Tax Agreement (DTA) between Australia and Country Y?

Answer:

Yes.

This ruling applies for the following period:

Year ended 30 June 2014

The scheme commenced on:

1 July 2013

Relevant facts and circumstances:

You were born in Country Z.

You are a citizen of Country Z.

You worked in Country Y until XXXX.

You moved to Australia in the 2014 income year.

You were a temporary resident of Australia as you held a temporary visa and had no spouse or dependants.

You spent more than 183 days in Australia in the 2014 income year.

You initially stayed in a hotel in Australia before moving to a leased apartment.

You opened a bank account in Australia.

You were not employed in Australia.

You lived on your savings along with a termination payment from a former employer while in Australia.

You applied for a TFN in Australia.

You joined a gym in Australia.

You joined Medibank health insurance in Australia.

You had a subscription with a relevant magazine in Australia.

You made monthly donations to a relevant charity in Australia.

You gave up your prior residences in Country Z and Country Y when you moved to Australia.

You were not a resident of Country Y for taxation purposes in the 2014 income year.

You were doing study in Australia.

You made five trips outside Australia in the 2014 income year five were in relation to your study, one relating to your visa conditions and one for a wedding.

Relevant legislative provisions:

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

Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision

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 income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.

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.

The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the:

The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established.

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.

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 IT 2650 and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia.

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

You came to Australia in the 2014 income year.

You were studying in Australia.

You spent more than 183 days in Australia in the 2014 income year.

You lived in a leased apartment in Australia.

You joined a gym and had private health cover.

Based on the facts above you were a resident of Australia for taxation purposes in the 2014 income year as your association with Australia demonstrated routine and habit consistent with residing here according to ordinary concepts.

In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements.

Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the ITAA 1997 so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations).

Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. The Country Y Agreement is listed in section 5 of the Agreements Act.

Under Article 4, an individual is a resident of Australia for the purposes of the DTA if they are a resident of Australia for the purposes of its tax, and is not:

You are a resident of Australia under Article 4(1) of the DTA.

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