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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

Your country of origin is Country X.

You arrived in Australia in to sign a professional sporting contract for more than two years.

Your partner travelled with you to Australia to live with you and had given up studies in Country X to start a new life with you in Australia and had found a job here.

You organised a broker to find you a house to in Australia. You looked at a few apartments and houses close to your training centre but did not find the perfect place you wanted to live in.

While looking for a suitable house you lived at accommodation owned by the sporting club you were associated with.

You flew back to Country X with your partner to organise yourself for your move to Australia. You organised all of your personal possessions to be shipped to Australia as you were intending to live here for the full time of your contract and possibly longer and even to reside here permanently.

While you were back in Country X organising your move to Australia, you were advised that the sporting club wanted to reduce the length of time of your contract. You refused as you had already signed the contract and you wanted to stay in Australia for that time.

You then flew back to Australia to sort out the contract situation. You arrived back in Australia and stayed again at the sporting headquarters.

The sporting club refused to honour the contract you signed.

You took the club to court for breach of contract.

After the stressful ordeal with the breach of contract, court proceedings and how you were treated, you and your partner had no other option but to return to Country X.

You and your partner moved back to Country X to try and wait and find a solution from there as that is where your support network (lawyers, family, friends) are.

Your personal belongings which were in approximately ten boxes were sent back to you in Country X when it was realised a solution was not going to be found for you to return to Australia to play for the sporting club you had signed up for.

You think you should be treated as a resident of Australia for tax purposes for the time you were here as your intention was to be here for more than five years.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6-1

Income Tax Assessment Act 1997 Subsection 6-5

Income Tax Assessment Act 1997 Section 995

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:

· the resides test

· the domicile test

· the 183 day test

· 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. 3^rd 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:

· intention and purpose of presence

· family and business/employment ties

· maintenance and location of assets

· social and living arrangements

In your case, your behaviour indicates that you were residing in Australia under the resides test. The factors that indicate that you reside in Australia are:

· You moved to Australia with your partner and intended to live here permanently for that time and to stay longer

· You packed up your personal possessions in Country X and moved them to your residence quarters in Australia with the view that you would be living here for a lengthy period of time

· Your partner moved here with you and gave up their studies in Country X and found a job here

· You had every intention to live in Australia for at least two years and it was only due to unforseen circumstances with a breach of your contract that you had to return to Country X

· You were in Australia for a period of four months except for a period of 6 weeks when you were back in Country X organising for the rest of your move to Australia)

· You were planning to buy a house in Australia and had organised a broker to look for suitable houses for you and your partner.

Based on the information you have provided, it is considered that your behaviour in Australia does reflect a degree of continuity, routine or habit that is consistent with residing in Australia.

Conclusion

Based on the information you have provided you are an Australian resident for tax purposes from the time you arrived in Australia.

Therefore, your assessable income includes income you derived directly or indirectly from all sources, whether in or out of Australia during the financial year ended 30 June 2011.