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Ruling
Subject: Residency status
Question and answer:
Are you a resident of Australia for income tax purposes for the period that you were in Australia?
Yes.
This ruling applies for the following period
Year ended 30 June 2009
Year ended 30 June 2010
The scheme commenced on
During 2009
Relevant facts
You were born overseas and are a resident of the country where you were born.
You are single.
You travelled to Australia for a working holiday.
You held a working/holiday visa.
Before leaving you country of origin you lived with your parents.
On your arrival to Australia you opened a bank account and worked in a particular job.
You lived at the one address with a friend in a leased apartment.
After a period you left Australia for an overseas holiday.
Due to the nature of your visa you were restricted from working for the one employer for more than 6 months.
On your return to Australia you moved to another state where you lived at the one location in a leased house with a friend's relative.
When you moved location you worked for another employer.
You did not pay any tax in your country of origin.
Your assets in Australia consist of your bank account.
You do not hold any assets in your country of origin.
Your social and sporting ties in Australia consist of a church group that you joined and friends.
You do not have any social or sporting ties in your country of origin.
You have not been an employee of the Commonwealth Government of Australia.
You intended to return to your country of origin once your visa had expired, however due to the illness of a family member you returned a month prior to your visa expiring.
Relevant legislative provisions
Income Tax Assessment Act 1997, Subsection 995-1(1)
Income Tax Assessment Act 1996, 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 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.
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:
§ intention or purposes of presence;
§ family and employment ties;
§ maintenance and location of assets; and
§ social and living arrangements.
From the information that you have provided you:
§ arrived in Australia on a working holiday with the intension of returning to your country of origin once your visa expired;
§ travelled to Australia under a working/holiday;
§ had 2 long term employment assignments;
§ do not have any assets overseas and your Australian held assets consist of a bank account;
§ live in long term accommodations that you shared with a friend, and you friend's relative; and
§ joined a church group in Australia.
On the balance, it is considered that your behaviour in Australia reflects a degree of continuity, routine or habit that is consistent with residing here. Therefore you are considered to be 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 under the 'resides test', the other tests contained in subsection 6(1) of the ITAA 1936 need not be considered.