Edited version of private ruling

Authorisation Number: 1011718602859

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Ruling

Subject: Income tax - residency

Question

Am I a resident for tax purposes?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 2011

The scheme commences on:

1 July 2010

Relevant facts and circumstances

You arrived in Australia on a Subclass 457 Long Stay Work Visa.

You were sponsored by the company that employed you.

You received advice from the ATO that you were a resident for tax purposes when you applied for your tax file number.

Your sponsor recently changed to another company. This company was taxing you as a resident however the company has been given advice to tax you as a non-resident.

At this point, you have every intention of returning to your country of origin at the end of your four year working visa.

You are currently living in a rented apartment.

Your wife lives with you and you have no children.

You hold all of your assets in Australia.

You are the member of a number of clubs and organisations in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-1 and

Income Tax Assessment Act 1997 Section 6-5.

Reasons for decision

Summary

You are a resident for tax purposes.

Detailed reasoning

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 at ordinary concepts 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. 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'.

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 facts when considered collectively indicate that you are residing in Australia:

· You came to Australia on a 457 Long Stay Work Visa

· Your wife is living here with you

· You are renting an apartment

· You will be here for at least four years

· All of your assets are in Australia

· You are the member of a number of clubs and organisation within Australia.

Therefore you are an Australian resident for taxation purposes as your behaviour in Australia reflects a degree of continuity, routine or habit that is consistent with residing here.