Edited version of private ruling

Authorisation Number: 1011493130089

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Ruling

1. Are you a resident of Australia for tax purposes?

Yes.

2. Is your income from employment assessable in Australia?

Yes.

This ruling applies for the following period

1 July 2009 - 30 June 2010

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You started working for an country A company, in an overseas office.

You left this country to work out of another overseas office of the same company.

You salary and wages are paid by the first office into your first bank account.

You have been paying tax in the Asian country and have a bank account in that country.

In the second country you lived in a unit and paid monthly rent.

You arrived in Australia under your spouses Temporary Business Entry visa subclass 457.

You moved to Australia because your spouse's employer requested they transfer here.

You are currently not paying tax in any country you have lived in.

You purchased a house in Australia.

You have opened bank accounts in Australia.

You child attends child care.

You have undertaken business trips since arriving in Australia.

Your spouse and child remain here in Australia when you travel for business.

You have spent a total of 107 days in Australia since arriving.

You applied for permanent residency under the Employer Nomination Scheme sponsored by your spouse's employer.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5(2)

Income Tax Assessment Act 1997 Section 6-5(3)

Income Tax Assessment Act 1997 Section 768-910(1)

Income Tax Assessment Act 1997 Section 768-910(3)

Reasons for decision

Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. Subsection 6-5(3) of the ITAA 1997 provides that the assessable income of a foreign resident taxpayer includes ordinary income derived directly or indirectly from all Australian sources during the income year. Employment income is ordinary income and assessable if you are an Australian resident.

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 resides test

· the domicile test

· the 183 day test

· the superannuation 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. 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 ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd 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'.

Taxation Ruling TR 98/17 considers the residency status of individuals entering Australia and states 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.

In your case, it is considered that you are an Australian resident for tax purposes under the resides test for the following reasons:

· you came to Australia with your spouse and child with an intention to live here permanently

· you have applied for permanent residency

· you have purchased a home in Australia

· you have a joint Australian bank accounts with your spouse

· you have been in Australia for a short period of which less than 15 days has been spent working overseas.

Based on the information you have provided, it is considered that you are an Australian resident for tax purposes from the date of your arrival in Australia as your behaviour in Australia reflects a degree of continuity, routine or habit that is consistent with residing here. Therefore, your assessable income includes income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year. You will be entitled to a pro-rated tax free threshold and will be taxed at resident rates from the month of your arrival in Australia. 

From 1 July 2006, taxpayers considered to be temporary residents have not had to pay tax in Australia on most of their foreign income if they:

· are an individual who is an Australian resident for tax purposes, and

· satisfy the requirements of being a temporary resident.

A taxpayer will be considered to be a temporary resident if:

· they hold a temporary visa granted under the Migration Act 1958

· they are not an Australian resident within the meaning of the Social Security Act 1991, and

· their spouse is not an Australian resident within the meaning of the Social Security

Section 768-910 of the ITAA 1997 relates to income derived by temporary residents.

Under 768-910(1) the following are non-assessable non-exempt income:

(a) the ordinary income you derive directly or indirectly from a source other than an Australian source if you are a temporary resident when you derive it

(b) your statutory income (other than a net capital gain) from a source other than an Australian source if you are a temporary resident when you derive it.

However, under section 768-910(3) the following are not non-assessable non-exempt under subsection (1):

the ordinary income you derive directly or indirectly from a source other than an Australian source to the extent that it is remuneration, for employment undertaken, or services provided, while you are a temporary resident;

Therefore, the employment income you receive is assessable under subsection 6-5(2) of the ITAA 1997.