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Ruling

Subject: residency

Question and answer:

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following period:

Year ended 30 June 2012

The scheme commenced on:

1 July 2011

Relevant facts

You are a citizen of and were born in an overseas country.

You have a 457 visa for X years which can be extended to 4 years and beyond.

You have started work in Australia.

You are not sure of your intentions at this stage it is too soon to make a decision about staying in Australia on a permanent basis.

If you leave your job before 1X months is up you are required to refund your relocation costs.

Your work contract is open ended.

Your family remains in the overseas country.

Your spouse will join you in Australia in a few months.

You are living in rented accommodation in Australia.

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  

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:

1. the resides test

2. the domicile test

3. the 183 day test

4. the superannuation test

Taxation Ruling TR 98/17 discusses the residency status of individuals entering Australia. TR 98/17 provides that when determining whether a person resides in Australia within the ordinary meaning of "resides", the following factors are considered:

· intention and purpose of presence

· family and business/employment ties in Australia and overseas

· maintenance and location of assets

· social and living arrangements

· period of physical presence in Australia

Residency is a question of fact and that no single factor necessarily determines residency. TR 98/17 at paragraph 18 states:

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

TR 98/17 also provides that individuals who enter Australia and stay beyond 6 months are regarded as residents from the time of their arrival, so long as their intention and presence has a habitual and routine character during the entire period.

In your case you arrived in Australia to work. You have a work visa 457 and have an open ended contract. You are living in rented accommodation. Your spouse will be joining you in a few months. You are uncertain of your intentions to stay at this stage. If you leave before 1X months is up on the contract you are required to pay all relocation costs back to your employer.

Your behaviour from the time you arrived here has shown a degree of continuity and routine that is consistent with residing here. This fact along with the intention of your spouse to join you in a few months demonstrates that you have an intention to at least be here a few more months and that currently you are settled here.

You are a resident of Australia for taxation purposes from the time you arrived in Australia.