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Ruling

Subject: Residency status

Question and answer:

Are you a resident of Australia for income tax purposes from the date that you arrived in Australia?

Yes.

This ruling applies for the following period:

Year ended 30 June 2011

The scheme commenced on:

1 July 2010

Relevant facts

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

You are single.

You arrived in Australia on an extended working holiday visa.

You came to Australia to work, tour and enjoy the Australian lifestyle.

You intend to reside in Australia permanently, and to that end you have engaged the services of an immigration agent to pursue a course of action to enable you to reside in Australia permanently.

Should your efforts to reside in Australia be unsuccessful you will leave Australia when your visa expires and move overseas to live with relatives.

You have not left Australia for any period since your arrival.

You were contracted by an employment agency for a period in a metropolitan city.

Due to visa restrictions that prohibit you from working more than 6 months with an employer, after your contract was complete you gained primary production employment and moved a distance away from the city.

Once you have completed your primary production employment you intend you intend to return to the metropolitan city re-commence contract.

While working in metropolitan Adelaide you lived in a rented room for an extended period. Due to security reasons you moved in other rental accommodation, which is being held upon your return to the metropolitan city.

When you were engaged in primary production employment you moved on location where you lived with a friend's parents.

Your assets that you hold in Australia consist of a bank account that is used to receive income and pay every day expenses.

Your assets that you hold overseas consist of a relatively unused bank account.

Before arriving in Australia you lived in a house owned by your father which you paid rent. The house is now occupied by your sister and should you return to your country of origin you would be required to find alternate accommodation.

Your social and sporting ties in Australia include a network of friends that you have met since arriving in Australia through work and through the participation in social events.

You have many friends in your country of origin, however you do not belong to a social or sporting club.

You have never been a Commonwealth of Australia employee.

You are over 16 years of age.

Should your application for Australian citizenship be successful you intend to reside in Australia permanently.

Relevant legislative provisions

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

Income Tax Assessment Act 1936, Subsection 6(1).

Reasons for decision

An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to be a person who is a resident of Australia for the purposes 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 determine 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.

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 satisfy the conditions of one of the other three tests.

The resides test

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia, discusses the Commissioner's view in regards to the residency status of individual's entering Australia. Tax Ruling TR 98/17 provides that the period of physical presence and the quality and character of an individuals behaviour while in Australia assists in determining whether the individual resides here. Further TR 98/17 states that a person is an Australian resident for tax purposes under the resides or ordinary concepts test when their behaviour over a considerable time (generally six months or more) demonstrates a degree of continuity, routine or habit that is consistent with residing here.

The following factors are useful in describing the quality and character of an individuals behaviour:

o intention or purposes of presence;

o family and employment ties;

o maintenance and location of assets; and

o social and living arrangements.

From the information that you have provided you:

· arrived in Australia, with the intension of residing in Australia permanently and have engaged the services of an agency to assist in gaining Australia citizenship;

· travelled to Australia under working holiday visa;

· have not left Australia since your arrival;

· due to visa restrictions have work for a number of employee's for visa limited periods;

· have an Australian bank account which is your only asset in Australia;

· have a relatively unused overseas bank account which is your only overseas asset;

· have a network of friends in Australia that you have met through work and social functions; and

· have lived in long term accommodations, with your metropolitan city accommodation being held upon your return;

On the balance, it is considered that your behaviour in Australia reflects a degree of continuity, routine or habit that is consistent with residing in Australia, taking your visa restrictions into account. Therefore you are a resident of Australia for income tax purposes for this period under 'the resides test'.

As you are an Australian resident for income tax purposes according to the 'resides test', the other tests contained in subsection 6(1) of the ITAA 1936 need not be considered.