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Ruling

Subject: residency

Case number

Subject: Residency

Question and answer:

Are you a resident of Australia for taxation purposes?

Yes.

Are you required to lodge an Australian tax return?

Yes.

This ruling applies for the following period:

Year ended 30 June 2011

The scheme commenced on:

1 July 2010

Relevant facts

You are a citizen of Australia.

You were born overseas.

You departed Australia a number of years ago.

You do not intend to reside overseas permanently.

You do not have a permanent place to live overseas and you live in accommodation provided to you by your employer.

You do not have a work contract.

You return to Australia each month for 10 days.

You have no investments overseas.

You rent a property in Australia.

You have a savings account in Australia.

You do not pay tax in any other country.

Your family did not accompany you overseas.

You have family, and social connections in Australia and none overseas.

Neither you nor your spouse are or have ever been Commonwealth Government employees.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income tax Assessment Act 1997 Section 6-5

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

Reasons for decision  

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) advises that where you are an Australian resident for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non-resident of Australia for taxation purposes, your assessable income includes only income from an Australian source.

Subsection 995-1(1) of the ITAA 1997 defines an Australian resident as a person who is a resident of Australia for the purpose of the Income Tax Assessment Act 1936 (ITAA 1936).

The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the 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: Residency - Permanent Place of Abode outside Australia.

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.

The resides test

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'.

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.

In your case you left Australia to work overseas a number of years ago. You return to Australia for 10 days each month. You have a home and family to which you return to each month.

You merely work away from home and you choose to do this outside Australia rather than in Australia.

You are therefore residing in Australia according to ordinary concepts and you are a resident of Australia for tax purposes according to this test.

As you are a resident of Australia for taxation purposes under the resides test it is not necessary to look at the domicile, 183-day and superannuation tests.

Your residency status

You are a resident of Australia for taxation purposes for the 2010-11 financial year.

You are required to declare all your income both in and out of Australia in your Australian tax return.

Further issues for you to consider

ATO view documents
Taxation Ruling IT 2650: Residency - Permanent Place of Abode outside Australia.

Other references (non ATO view, such as court cases)

Does Part IVA, or any other anti-avoidance provision, apply to this ruling?

The application of Part IVA of the ITAA 1936 has not been considered as this topic is in the MEI low risk PART IVA list as specified in ORCLA.

Other relevant comments

I have complied with Practice Statements PS LA 2002/16 and PS LA 2003/9 in the completion of this report by checking the Technical Reference Search Engine, and using ORCLA.

Keywords

Residency

Technical Assurance

This advice satisfies corporate procedures around legal reasoning and decision making.