Edited version of private ruling

Authorisation Number: 1011494894744

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: Income Tax - Residence - Arriving in Australia

Are you a resident of Australia for tax purposes?

Yes.

This ruling applies for the following period:

Year ending 30 June 2011

The scheme commenced on:

1 July 2009

Relevant facts and circumstances

You were born and raised in Country A (country of origin).

You are a citizen of Country A.

You first arrived in Australia in early 2009.

You have a 457 Temporary Resident visa.

You intend to become a permanent resident of Australia

You have moved to Australia with your partner. You have no dependents.

Since arriving you have left Australia to visit your country of origin once. You visited your family.

In the foreseeable future, you will only be leaving Australia for work conferences.

Since arriving you have left Australia for a small number for work conferences.

You have a current employment contract.

You have signed an ongoing employment contract with an Australian government organisation commencing.

The Australian government organisation will be sponsoring your permanent resident application. The Australian government organisation will be filing the application on your behalf.

You are currently renting your place to live in Australia. The lease is jointly held in both your name and your partner's.

Your assets in Australia include bank accounts and savings.

Your assets in your country of origin include multiple bank accounts and one daily operating account.

You pay withholding tax on your bank accounts' interest in Country A.

You do not have a permanent place to live in your country of origin. You have the option to stay with your parents, but you have no ownership rights to their home.

You have established a circle of friends in Australia and have joined a professional society.

You have your relatives in your country of origin and some childhood friends.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

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 (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 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 considered to be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests.

The resides test

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'.

Although the question of whether a person resides in a particular country is a question of fact, the courts have referred to and taken into account various factors considered to be relevant. These are:

· whether the person is physically present in that country at some time during the year of income

· the history of the person's residence and movements

· if the person is a visitor to the country, the frequency, regularity, duration and purpose of the visits

· if the person is outside the country for part of the relevant income year, the purpose of the absences

· the family and business ties which the person has with the particular country, and

· whether a place of abode is maintained by the person in the relevant country or is available for his or her use while there.

Taxation Ruling IT 2650 emphasises the intended and actual length of the individual's stay in an overseas country, any intention to return to Australia or travel elsewhere, the establishment or abandonment of any residence, and the durability of association that the individual maintains with a particular place in Australia as the main factors to be considered when determining the residency status of individuals leaving Australia.

In your case you have relocated to Australia, you have a lease in Australia and no property connections in your country of origin. You have only spent about a week outside of Australia in pursuit of activities not connected to your Australian employment. You have relocated to Australia with your partner. You intend to remain in Australia permanently and are in the process of gaining permanent resident status. You meet the requirements of the resides test.