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Ruling
Subject: Residency
Questions and answers
Are you a resident of Australia for tax purposes for the year ended 30 June 2011?
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 Country X.
Your country of origin is Country X.
You have been travelling to Australia and working here on a number of occasions for a number of years.
You hold a UC-457 Visa but have since applied for a permanent visa (skilled, migrant class VE, subclass 175).
You have been living and working in Australia for a company for the past two years. This company operates out of Australia and Country X.
For eight months you were renting an apartment in an Australian city which you shared with two others.
You lodged your 2010 tax return with a Tax Agent and your 2010 notice of assessment stated you were a resident for tax purposes.
You have continued living in Australia but returned to Country X on two separate occasions during the year ended 30 June 2011. You returned to Country X for work and personal reasons. You remained working for the information systems company at their office in Country X.
When you returned to Australia after spending fifty days in Country X you returned to live in the apartment you had rented prior to leaving Australia.
When you went back to Country X you stayed in your new house that had recently been constructed. This time you were in Country X for a total of 225 days.
While you were in Country X you were offered an employment contract with an Australian company for a full time term of four years.
You accepted the position and have been living and working in Australia since being offered the position.
You are single with no dependants.
You have no family members in Australia.
You have no sporting or social connections in Australia at this stage.
You have had an Australian bank account for a number of years and have superannuation.
You decided when you first started living in Australia that you would like to live in Australia permanently.
Assumptions
Taxpayer considers he is a resident of Australia for tax purposes for the year ended 30 June 2011 as he has spent more than 183 days in Australia although this was not continuous but was broken with 2 trips back to Country X.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2).
Income Tax Assessment Act 1936 Subsection 6(1).
Reasons for decision
Residency
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 Income Tax Assessment Act 1936 (ITAA 1936). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are:
o the resides test
o the domicile test
o the 183 day test
o 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. If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established.
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'.
Taxation Ruling TR 98/17 Income Tax: residency status of individuals entering Australia states that 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.
The following factors are useful in describing the quality and character of an individuals behaviour:
o intention and purpose of presence
o family and business/employment ties
o maintenance and location of assets
o social and living arrangements.
In your case, your behaviour indicates that you are residing in Australia under the resides test. The factors that indicate that you reside in Australia are:
o You have been living and working in Australia since for the past two years
o You were living in rental accommodation in Australia
o In the year ended 30 June 2011 you spent more time working and living in Australia than you did in Country X
o You have applied for permanent residency
o Your behaviour in Australia does reflect a degree of continuity, routine or habit that is consistent with residing in Australia.
As you are a resident under the resides test it is not necessary to consider the other tests.
Conclusion
You are an Australian resident for tax purposes. Therefore, your assessable income includes income you derived directly or indirectly from all sources, whether in or out of Australia during the income year.