Edited version of private ruling

Authorisation Number: 1011749986908

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Ruling

Subject: Residency

Question and answer:

Are you an Australian resident for taxation purposes?

No.

This ruling applies for the following period:

1 July 2007 to 30 June 2011.

The scheme commenced on:

1 July 2007.

Relevant facts:

You are a citizen of another country.

You visit Australia on a Tourist Visa

The Department of Immigration and Citizenship website identifies the Tourist Visa as one which allows temporary travel to Australia, for tourism or for visiting family or friends, for periods of up to 12 months.

The purpose of your trips to Australia is to visit family.

When you visit Australia, you reside with family .

You stay in Australia for the maximum period of 12 months allowed under your Visa.

You do not earn any money from employment in Australia.

You have no assets in Australia.

You have assets in the other country.

You have other family in the other country.

Relevant legislative provisions:

Income Tax Assessment Act 1997 section 995-1(1)

Income Tax Assessment Act 1936 subsection 6(1)

Reasons for decision

Residency for taxation purposes

The Australian Taxation Office (ATO) view on the residency status of individuals entering Australia is contained in Taxation Ruling TR 98/17. TR 98/17 notes that when an individual arrives in Australia all the facts about his or her presence must be considered to determine the individual's residency status for taxation 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 a resident of Australia for income tax purposes. These tests are:

· the resides test,

· the domicile and permanent place of abode test,

· the 183 day test, and

· the superannuation test.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

The primary test for determining the residency status of an individual for taxation purposes is the resides test. If residency is established under the resides test, the remaining three tests do not need to be considered.

The resides test

The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'.

The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01 defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'.

TR 98/17 notes that the ordinary meaning of the word 'reside' is wide enough to encompass an individual who migrates permanently to Australia, or one who is simply dwelling in Australia for a considerable time. However, while the period of physical presence or length of time an individual is in Australia is a relevant factor to be considered, it is not necessarily decisive in determining whether an individual is residing in Australia for taxation purposes.

In most cases, the Commissioner accepts that a visit to Australia of less than six months is not sufficient time to be regarded as residing here.

When an individual is in Australia for six months or more, the Commissioner considers the individual's behaviour over the time spent in Australia to determine if there is any degree of continuity, routine or habit in that behaviour that is consistent with residing here.

In assessing an individual's behaviour while in Australia, the Commissioner considers a number of factors, including:

Intention or purpose of presence :TR 98/17 notes that intention or purpose is to be determined objectively, having regard to all relevant facts and circumstances and cites the following examples:

An individual who enters Australia as a visitor on holiday (albeit repeatedly and for lengthy periods of time) demonstrates they do not intend to reside in Australia.

Having a settled purpose, such as full time employment, supports an intention to reside in Australia.

In your case, you enter Australia on a tourist visa which allows for temporary travel to Australia for up to 12 months at a time for tourism or for visiting family or friends. The purpose of your visits to Australia is to visit family. Although you stay in Australia for the maximum 12 month period allowed under your visa, you return to the other country at the end of each visit and you do not earn any income from employment while you are in Australia. Consequently, we consider that you enter Australia with neither the intention, or purpose of residing here. Rather, we consider that you are in Australia as a visitor on holiday.

Family and business/employment ties : TR 98/17 notes that the presence of an individual's family in Australia does not always result in a decision that the individual is residing here.

Whilst we recognise you have family ties in Australia, those ties are not considered sufficient to suggest you are residing here for taxation purposes.

TR 98/17 further specifies that an individual who is dwelling here for a considerable time while on an employment contract would be residing here, whereas a mere visitor on holiday would not.

As stated above, we consider that when you are in Australia, you are here as a visitor on holiday.

Maintenance and location of assets ::TR 98/17 notes that having assets in Australia adds weight to concluding an individual's behaviour is consistent with residing here.

In your case, you have no assets in Australia.

Social and living arrangements: TR 98/17 notes that social and living arrangements are the way an individual interacts with their surroundings during their stay in Australia and specifies that joining sporting or community organisations, or committing to a residential lease are examples of social and living arrangements that may indicate an individual is residing here.

In your case, although you have some family in Australia with whom you stay during your visits here, you have not developed any social connections outside of those family connections. Accordingly, we do not consider you social connections are sufficient to suggest you are residing here.

In view of the above, the Commissioner considers that your behaviour in Australia does not reflect a degree of continuity, routine and habit that is consistent with residing here.

You are not considered to be an Australian resident under the resides test.

The domicile and permanent place of abode test

Under this test, a person whose domicile is in Australia is deemed to be a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's permanent place of abode is outside Australia.

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice.

In order to acquire a domicile of choice, a person must have, and be able to prove, an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person is granted permanent residency or becomes a citizen of a country outside of their domicile of origin.

In your case, we consider your domicile to be in the other country because you are a citizen of that country.

You have not obtained a domicile of choice in Australia because you have not become a citizen of Australia or been granted permanent residency.

You are not a resident of Australia under the domicile and permanent place of abode test.

The 183-day test

TR 98/17 notes this test was introduced to prevent individuals who are enjoying an extended holiday in Australia from being treated as residents of Australia for taxation purposes. The test considers an individual's usual place of abode and intention with regard to taking up residence in Australia.

Under this test, a person who is in Australia for 183 days during an income year may be considered a resident of Australia for taxation purposes, unless the Commissioner is satisfied the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.

TR 98/17 specifies that in most cases, if an individual is not residing in Australia under the resides test, their usual place of abode is outside Australia.

As previously discussed, you are not a resident of Australia under the resides test. Rather, you are a visitor on holiday in Australia whose usual place of residence is in the other country where your assets are located.

You are not a resident of Australia under the 183 day test.

The superannuation test

This test is not relevant in your situation as it only applies to persons eligible to contribute to the superannuation funds for Commonwealth (Australian) government officers, their spouses, or their children under the age of 16 years.

Conclusion - your residency status

You do not satisfy any of the tests of residency outlined in subsection 6(1) of the ITAA 1936.

You are not an Australian resident for taxation purposes.