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Ruling

Subject: Residency status

Question and answer:

Are you a resident of Australia for income tax purposes?

Yes.

This ruling applies for the following period

Year ended 30 June 2012

The scheme commenced on

1 July 2011

Relevant facts

You were born in country X and are a citizen of both country X and Australia.

You are single.

You moved to Australia with the intention of residing permanently.

You left Australia to travel to country X.

Your purpose of travelling to country X was for a holiday to visit family and to get married.

While overseas you did not engage in any employment activity.

You returned to Australia after an extended period after your spouse received an Australian visa.

When in country X you lived in your parent's residence.

Prior to leaving Australia you lived in rental accommodations with a friend whom you shared expenses with.

Your assets in Australia consist of a bank account.

You do not own any assets in country X.

Your sporting ties in both Australia and country X involve sporting clubs.

You have never been a Commonwealth Government of Australia employee.

You are over 16 years of age.

You plan to live 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 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: Residency - Permanent Place Of Abode Outside Australia.

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

The first question to be asked in considering the residency status of a person is whether he or she can be considered to reside in Australia. If the test of residence according to ordinary concepts is satisfied, there is no need to apply any of the other tests. The person is a resident of Australia for income tax purposes.

The ordinary meaning of the word 'reside', according to the Shorter Oxford English Dictionary, 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 considers the residency status of individuals entering Australia and 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 individuals behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here.

The quality and character of an individual's behaviour while in Australia assist in determining whether the individual resides here.

All the facts and circumstances that describe an individual's behaviour in Australia are relevant. In particular, the following factors are useful in describing the quality and character of an individual's behaviour:

· intention or purpose of presence;

· family and business/employment ties;

· maintenance and location of assets; and

· social and living arrangements.

No single factor is necessarily decisive and many are interrelated. The weight given to each factor varies depending on individual circumstances.

Although Tax Ruling 98/17 deals with individuals arriving in Australia the same principals can be applied when determining whether individuals leaving Australia are in fact residing overseas.

In your case, you left Australia for the purpose of visiting family and to get married. You travelled to country X with the view of returning once you were married and your spouse received an Australian visa. While in country X you did not engage in any employment activity and did not possess any assets of significance in either Australia or country X. While in country X you lived in your parent's residence. In considering the above factors, as the main purpose for travelling to country X was to have a holiday to visit family and to be married, it is considered that you were not residing in country X.

Accordingly, for the period that you lived in country X you continued to reside in Australia and so continued to be an Australian resident for taxation purposes under the 'resides test'.

As you will be a resident under the resides test it is not necessary to consider the other tests.