Edited version of private ruling

Authorisation Number: 1011838681389

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Ruling

Subject: Residence

Questions and answers:

Are you a resident of Australia for tax purposes?

No

This ruling applies for the following periods:

Year ended 30 June 2007

Year ended 30 June 2008

Year ended 30 June 2009

Year ended 30 June 2010

Year ending 30 June 2011

The scheme commenced on:

1 July 2006

Relevant facts and circumstances

You have a permanent home in your country of origin which you occupy during your stay there.

You have a permanent home in Australia which you occupy during your stay there.

You are not a citizen of Australia.

You are a citizen of your country of origin.

You hold a 5 year resident return visa (subclass 155) for Australia.

You have an investment property in your country of origin.

You have an investment property in Australia which you don't rent.

You have personal banking accounts in Australia.

You have business and personal banking accounts in your country of origin.

Your only source of income in Australia is bank account interest.

You source business income in your country of origin.

You operate a family business in your country of origin.

Your child in Australia resides with a relatives and not in your Australian property.

You are not accompanied to Australia by your spouse

Whilst in Australia you partake in gambling at your local casino where you have a membership.

Neither you or your spouse have ever been Commonwealth Government employees.

You maintain a mix of personal assets in both Australia and your country of origin

You are in Australia for more than 150 days but less than 200 days in any of the income year.

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, and

· 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.

Your movements between Australia and your country of origin are irregular, there is no regular pattern of travel shown in your history of movement between the two countries. Your physical presence in Australia shows a duality of presence in Australia and your country of origin.

Taxation Ruling TR98/17 (Income tax; residency status of individuals entering Australia) states that an individual's 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. The following factors are used to describe the quality and character of an individual's behaviour:

· intention or purpose of presence;

· family and business/employment ties;

· maintenance and location of assets; and

· social and living arrangements

Intention or purpose of presence

The individual's intention, purpose or reason for being in Australia assists in determining whether an individual resides here. While individuals may have multiple reasons, there is usually a main purpose to their presence.

You have a parent and sibling who reside in Australia and you visit them during your stays here. Your visits in Australia are mostly to relax and enjoy the gaming facilities available here. Your time spent in Australia offers your respite from your ordinary habits in your home country.

Your purpose of presence in Australia is not to reside here.

Family and business ties

When you travel to Australia you do not travel with your spouse whilst you are here as you undertake a pastime which you do not have in-common with your spouse.

You operate a business in your country of origin, you have no current business or employment interests in Australia.

Your family ties are balanced between Australia and your country of origin. Your business ties are non-existent in Australia. Your combined family and business ties are stronger with your country of origin than Australia.

Maintenance and location of assets

You maintain a mix of assets in both Australia and your country of origin. When applying this consideration to your circumstances, your residence in Australia and your country of origin is indistinct.

Social and living arrangements

You maintain social and living arrangements in both Australia and your country of origin. When applying this consideration to your circumstances, your residence in Australia and your country of origin is indistinct.

Whilst your physical presence frequently alternates between Australia and your country of origin, your behavioural trends show you to be a resident of your country of origin.

You are not a resident of Australia under the resides test.

The domicile test

Under this test, a person is a resident of Australia for tax purposes if their domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside of Australia.

Domicile

Domicile is a legal concept, determined according to the Domicile Act 1982 and common law rules established by private international law cases.

Domicile is the place that is considered by law to be your permanent home. It is usually something more than a place of residence.

You are a permanent resident of Australia and you are a citizen in your country of origin.

The intention that a person must have in order to acquire a domicile of choice in a country is the intention to make his or her home indefinitely in that country. As you have not surrendered your sole citizenship with your country of origin and you enjoy residence status with both Australia and your country of origin, your citizenship with your country of origin indicates that Australia is not your domicile.

The 183 day test

Under the 183 day test, a person is a resident of Australia if they are actually physically present in Australia for more than 183 days in an income year unless the Commissioner is satisfied that their usual permanent of abode is outside of Australia and they have no intention of taking up residence here.

You are not in Australia for more than 183 days during the income years in question. Therefore, you are not an Australian resident under the 183 day test.

The superannuation test

A person will be considered a resident under the Commonwealth superannuation fund test if they currently contribute to certain superannuation funds for Commonwealth government employees. The eligible funds are funds:

· established under the Superannuation Act 1976 (such as the Commonwealth Superannuation Scheme), or

· established under the Superannuation Act 1990 (such as the Public Sector Superannuation Scheme), or

· the spouse or child under 16 of a person covered by either of the above funds.

As neither you, or your spouse, have ever been Commonwealth government employees you are not a resident of Australia under the superannuation test.

Your residency status

As you do not meet any of the above tests, you are not a resident of Australia for tax purposes.