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Edited version of your written advice
Authorisation Number: 1051333999400
Date of advice: 6 February 2018
Ruling
Subject: Residency
Question
Are you a resident of Australia for income tax purposes?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 2017
Year ending 30 June 2018
The scheme commences on:
1 July 2016
Relevant facts and circumstances
You were born in Country X.
You are a citizen of Country X.
You arrived in Australia in summer 2017.
You plan to depart Australia in autumn 2018.
You travelled to Australia with your family under a visa, which is a temporary visa.
Your role predominately whilst in Australia was to look after the children and complete daily household duties.
Your spouse is a visiting fellow and the contract is for the period from summer 2017 through to autumn 2018.
Your spouse and family have travelled to Australia also under a visa.
You entered a rental agreement for a house, for the period of your stay in Australia.
You have a membership with a local club in Australia.
You are a part of a book circle in Australia, which convenes once a month.
Your children attend school in Australia.
You have owned a home in Country X since 2007.
Your home in Country X has been rented out whilst you have been in Australia.
You are still currently employed with your Country X employer.
You have a bank account in Australia to cover your day to day transactions such as rent, grocery shopping etc.
Your Country X employer has offered you part time work whilst you are in Australia from summer 2017 through to autumn 2018.
You have received income from sources outside of Australia.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 995-1(1)
Income Tax Assessment Act 1936 Subsection 6(1)
Reasons for decision
Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes 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. The tests are:
● the ‘resides’ test,
● the ‘domicile’ test,
● the 183 day test, and
● the superannuation test.
If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.
The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.
The resides test
The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word ‘reside’. As the word ‘reside’ is not defined in Australian taxation law, it takes its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936.
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 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.
(i) physical presence in Australia
(ii) nationality
(iii) history of residence and movements
(iv) habits and ‘mode of life’
(v) frequency, regularity and duration of visits to Australia
(vi) purpose of visits to or absences from Australia
(vii) family and business ties with Australia compared to the foreign country concerned; and
(viii) maintenance of a place of abode.
Weight given to each factor varies with individual circumstances and no single factor is necessarily decisive. In Shand v Federal Commissioner of Taxation 2003 ATC 2080, the Tribunal stated (at 35):
Questions of residence, domicile, permanent place of abode, have frequently been found by the courts and tribunals to be difficult to assess on a factual level and not easy to define in concrete legal terms.
To determine whether or not you are residing in Australia for taxation purposes, it is necessary for us to examine each of these factors in the context of your circumstances.
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 Joachim v Federal Commissioner of Taxation 2002 ATC 2088, the Tribunal stated (at 2090):
Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home.
Further, in Iyengar v. Federal Commissioner of Taxation 2011 ATC 10-222, (2011) AATA, the Tribunal stated (at 62):
Physical presence in a country for some period during a particular year of income is usually considered by the courts as necessary in order that a person should be resident in that country during that particular income year. However, there have been exceptions to this: Rogers v Inland Revenue Commissioners (1879) 1 TC 225 and Slater v Commissioner of Taxation (NZ) (1949) 9 ATD 1.
In your case, you have been living in Australia since summer 2017 with your family accompanying you; you have established a living residence and connections in Australia.
Therefore, you are a resident of Australia for taxation purposes under this test and will continue to be an resident for tax purposes up until your date of departure.
As you meet the resides test there is no need to assess your eligibility against any of the other tests.
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