Edited version of private advice

Authorisation Number: 1051809094685

Date of advice: 5 March 2021

Ruling

Subject: Residency for tax purposes

Question

Will you commence being a resident of Australia for tax purposes from the day you arrive here?

Answer

Yes

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are a citizen of a foreign country.

For over XX years, you have spent most of your time residing in Country X where you have established a home together with your spouse.

You consider that you have been a non-resident of Australia for tax purposes for this period.

You own a motor vehicle in Country X.

You have adult children from a previous marriage that do not live in Australia.

You have siblings that do not live in Australia.

You have travelled to Australia on various occasions in the past for business reasons and to visit friends and your spouse's family.

During the last four income years, you have spent no more than 70 days in Australia in any one year.

On these visits, you mostly stayed with your spouse's family and sometimes in hotels or with friends.

In Australia, you hold minority shares in two companies and a majority share in another company.

Your other Australian assets comprise of interest earning bank accounts and a motor vehicle.

You have never purchased any real property in Australia.

You do not have any loans or liabilities in Australia.

You have been granted a visa that allows you to travel in and out of the country for a period of four years, and you have 12 months from the issue date of the visa in which to arrive in Australia

You wish to migrate to Australia together with your spouse and you intend to arrive here sometime before the 12 month entry deadline. However, you have not yet booked a flight and do not know exactly when you will arrive due to limits on incoming arrivals and the COVID-19 situation generally.

After you arrive in Australia, you intend to reside here permanently and will consider Australia to be your home.

You are not a member of any superannuation scheme under the Superannuation Act 1990 and are not an eligible employee for the purpose of the Superannuation Act 1976.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(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 an individual is a resident of Australia for income tax purposes. These tests are:

•   the resides test,

•   the domicile test,

•   the 183 day test, and

•   the superannuation test.

Only one of the tests needs to be met for an individual to be a resident of Australia for tax purposes.

The resides test

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.

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 5th edition, The Macquarie Library Pty Ltd, NSW, is 'to dwell permanently or for a considerable time; have 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'.

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia states that an individual may be a resident under the resides test if their behaviour while they are here is such that they exhibit a degree of continuity, routine or habit that is consistent with a person residing in Australia according to the ordinary meaning of the word 'reside'.

Further, the ordinary meaning of the word 'reside' is wide enough to encompass an individual who comes to Australia permanently and an individual who is dwelling here for a considerable time. A migrant who comes to Australia intending to reside here permanently is a resident from arrival.

In your case, you cannot become a resident prior to your arrival in Australia. Therefore, you will be a resident for tax purposes from the day you arrive in Australia intending to stay here permanently.

Additional information

Where a person becomes a resident for tax purposes part way through an income year:

•   the foreign source income received by the person during the non-resident period is not assessable in Australia, and

•   the tax-free threshold is apportioned based on the number of months in the income year that the person is a resident.

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