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Ruling

Subject: Residency status

Question and Answer:

Were you a resident of Australia for tax purposes for the period date A to date B?

No

This ruling applies for the following periods:

Year ended 30 June 2011

The scheme commenced on:

1 July 2010

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You were born in Country X and you are a citizen of Country X.

You arrived in Australia on date A in the 2010-11 income year and left Australia on date B less than six months later in the same income year.

You had a work and holiday visa.

Your main reason for visiting Australia was to learn about another country. To do this you worked most of the time and travelled during your time off.

You were employed with one employer for the duration of your stay in Australia at a hotel as a food and beverage attendant.

Your employment was not organised before you arrived in Australia.

You stayed in hostel type accommodation whilst in Australia. You stayed at the one address for the duration of your stay here.

The belongings you brought to Australia were your clothes, visa, camera and shoes.

Your assets in Country X are a car.

You do not possess any assets in Australia.

You did not have any social or sporting commitments when in Australia, apart from some friends you met when staying here.

Your social and sporting commitments in Country X include your family, friends, your job and studies.

You are not eligible to contribute to the Public Service Superannuation Scheme or the Commonwealth Superannuation Scheme.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1).

Income Tax Assessment Act 1997 Section 995-1.

Reasons for decision

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

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 dictionary meaning, 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 specifies that the period of physical presence in Australia and an individuals behaviour while present in Australia are important factors for the purpose of the resides test and may reflect a degree of continuity, routine, or habit that is consistent with residing here.

Whether a considerable time has elapsed to demonstrate that an individual's behaviour has the required continuity, routine or habit is a question of fact and the Commissioner's view of the law is that six months is a considerable time when deciding whether an individual's behaviour is consistent with residing in Australia.

When behaviour consistent with residing here is demonstrated over a considerable time, an individual is regarded as a resident for taxation purposes from the time the behaviour commences. In considering an individual's behaviour while in Australia, the Commissioner considers a number of factors, including:

1.                  intention or purpose of presence;

2.                  family and business/employment ties;

3.                  maintenance and location of assets;

4.                  social and living arrangements.

You were a not a resident of Australia according to ordinary concepts as:

§ You arrived in Australia on a work and travel visa.

§ Your main purpose of coming to Australia was to learn about another country.

§ You only brought minor personal belongings with you, namely your clothes, shoes and camera.

§ You stayed in hostel type accommodation.

§ You did not have any assets in Australia.

§ You were employed on a casual basis.

§ Your intention was to stay in Australia for a relatively short period.

§ You did not have any social or sporting commitments when in Australia, apart from some friends you met when staying here.

§ Your ties with Country X include your family, car, job and studies.

Based on the above facts you were not an Australian resident for taxation purposes for the period date A to date B under the resides test as your behaviour in Australia did not reflect a degree of continuity, routine or habit that is consistent with residing here.

The domicile test

If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

In your case you are domiciled in Country X. This is your domicile of origin.

In order to show that a new domicile of choice in a country outside Australia has been adopted, a person must be able prove an intention to make his or her home indefinitely in that country.

The expression 'place of abode' refers to a person's residence, where they live with their family and sleep at night. In essence, a person's place of abode is that person's dwelling place or the physical surroundings in which a person lives.

You have not yet abandoned Country X or chosen another country as your permanent home. You have not changed your domicile to Australia.

Thus you were not an Australian resident under the domicile test.

The 183 day test

Under this test, a person is required to be actually present in Australia for a total period of more than half the year of income, unless it can be established that the person's usual place of abode is outside Australia and there is no intention to take up residence here.

As you were not in Australia for 183 days or more, you were not a resident of Australia under this test.

The superannuation test

An individual is considered to be a resident if that person is eligible to contribute to the Public Service Superannuation Scheme (PSS) or the Commonwealth Superannuation Scheme (CSS), or that person is the spouse or child under 16 of such a person. Generally Commonwealth Government employees are eligible to contribute to the PSS or CSS.

As you are not eligible to contribute to the Public Service Superannuation Scheme or the Commonwealth Superannuation Scheme, you were not a resident under this test.

Your residency status from date A to date B

For the period date A to date B you were not a resident of Australia under any tests of residency outlined in subsection 6(1) of the ITAA 1936. You were therefore a non-resident of Australia for taxation purposes for the duration of your stay in Australia.