Edited version of private ruling

Authorisation Number: 1011696592358

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Ruling

Subject: Residency

Question and answer:

Are you a resident of Australia for tax purposes from early 2009 through until early 2011?

Answer: No.

This ruling applies for the following period:

Year ended 30 June 2009

Year ended 30 June 2010

Year ended 30 June 2011

The scheme commences on:

1 May 2009

Relevant facts and circumstances

You are not an Australian citizen.

You are a citizen of country x.

You came to Australia in early 2009 on a working holiday visa which expires in early 2011.

You currently have no intentions to stay in Australia permanently.

You plan to leave Australia when your visa expires.

You have been moving around Australia since you arrived.

You travelled to Australia with your friend from home.

You live with your parents in country x.

You have a bank account in Australia which you use for your income earned whilst working in Australia.

You are not currently working in Australia.

You are currently not paying tax in any other country.

Relevant legislative provisions

Section 6(1) of the Income Tax Assessment Act 1936

Reasons for decision

Are you an Australian resident for tax purposes?

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 an Australian resident for income tax purposes. These tests are:

1. The resides test

2. The domicile test

3. The 183 day test

4. The superannuation test

The first two tests are examined in detail in Taxation Ruling IT 2650.

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. However, where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.

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 individuals behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here.

The following factors are useful in describing the quality and character of an individuals behaviour:

· Intention and purpose of presence

· Family and business/employment ties

· Maintenance and location of assets; and

· Social and living arrangements.

Application of the factors to your circumstances:

· You came to Australia on a working holiday visa with an intention to see what Australia had to offer and to work whilst you travelled the country.

· You are leaving Australia just before your visa expires in 2011.

· You have no assets in Australia other than a bank account.

· You have no social or sporting connections in Australia.

· You do not intend to reside permanently in Australia.

· You have been moving around Australia whilst you have been here, spending 5-6 months at a time in different locations.

· You travelled to Australia with a friend from home.

Based on the information you have provided, it is considered that you are not an Australian resident for tax purposes under the resides test as your behaviour in Australia does not reflect a degree of continuity, routine or habit that is consistent with residing here.

The domicile test and superannuation tests

TR 97/18 explains that the domicile and superannuation fund tests apply mainly to individuals who are usually residents of Australia but during the income year are not living in Australia. You are a country x citizen who has entered Australia to travel and to work whilst you are travelling, these tests do not apply to you.

183 days test

Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

From your arrival in Australia in 2009 until your planned date of departure, you were present in Australia for more than 183 days during each income year.

You have indicated that you plan to stay in Australia only until just before your visa expires. You have a permanent place of abode in country x where you live with your parents and you have indicated that you do not intend to take up residence in Australia.

Under this test, you are not a resident of Australia from when you entered until you leave.

TR 98/17 provides the following example of a person entering Australia to travel and to work:

Janine Edgerton is a British national who has longed to spend twelve months 'down under'. After saving for years, she takes twelve months leave from her work and departs for Australia on her twenty-fourth birthday. Although she travels with considerable savings, her intention is to spend at least part of her time working. She has obtained a restricted working visa enabling her to work for no more than three months with one employer.

Through a contact in Australia she is assured of work in Perth for the first three months. After that period, she decides to travel to the east coast via Adelaide. She spends a month in Adelaide where she works for two weeks and continues her journey to Melbourne.

Once there, she meets some friends from back home. After working for a further three months, she decides to spend the balance of her time in Melbourne and uses her savings for living expenses. To keep costs down, she leases a house with two other friends. At the end of her twelve months in Australia, she returns to the United Kingdom.

Although Janine obtains work, by travelling from place to place she has not established a pattern of habitual behaviour, even though she is physically present in Australia for twelve months and she co-leases a house. Janine's main purpose for being here is to have a holiday and she is merely supplementing her savings by working.

Janine is a non resident of Australia.

Like Janine in the example above you are a non resident of Australia from when you entered the country until when you leave.