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Ruling

Subject: residency

Questions and answers

Are you a resident of Australia for taxation purposes?

Yes

This ruling applies for the following periods:

Year ended 30 June 2012

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You are a citizen of Country A.

You were born in Country A.

You commenced working in Australia under a fixed term hired assignment for a period of approximately twelve months.

You are living in Australia in rented accommodation with your spouse and child.

You have a salary account with an Australian bank.

When you are not working with the Australian company, you are employed by its counterpart in Country A.

You live in rented accommodation in Country A.

You have both a salary and savings account in Country A.

You have a one year contract with the company in Australia. This can be extended by six months.

You do not have any social or sporting connections in Australia

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection6(1).

Income Tax Assessment Act 1997 Section 6-5.

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

Reasons for decision

Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident as a person who is a resident of Australia for the purpose 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 an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.

The resides test

The ordinary meaning of the word 'reside', according to the dictionary definition, 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 notes that the ordinary meaning of the word 'reside' is wide enough to encompass an individual who migrates permanently to Australia or one who is simply dwelling in Australia for a considerable time.

In most cases, the Commissioner accepts that a visit to Australia of less than six months is not sufficient time to be regarded as residing here. However, when an individual is in Australia for six months or more, the Commissioner takes into consideration the individual's behaviour over the time spent in Australia to determine if there is any degree of continuity, routine or habit in the individual's behaviour that is consistent with residing here.

In assessing an individual's behaviour while in Australia, the Commissioner considers a number of factors, including:

· intention or purpose of presence - TR 98/17 notes that having a settled purpose supports an intention to reside in Australia;

· family and business/employment ties - TR 98/17 notes that the presence of family in Australia may indicate an individual is residing here;

· maintenance and location of assets - TR 98/17 notes that having assets in Australia, such as bank accounts, adds weight to concluding an individual's behaviour is consistent with residing here;

· social and living arrangements - TR 98/17 specifies that social and living arrangements are the way an individual interacts with their surroundings during their stay in Australia. Joining a professional organisation and committing to a residential lease are two examples of social and living arrangements that may indicate an individual is residing here.

In your case you:

· intend to live in Australia for approximately twelve months to fulfil your contract with the Australian company.

· have a spouse and child who have accompanied you to Australia;

· rent a house in Australia which you live in whilst here;

· have a salary account in Australia.

In view of the above the Commissioner considers that your behaviour in Australia does reflect a sufficient degree of continuity, routine and habit that is consistent with residing here. Accordingly, you are considered to be an Australian resident for taxation purposes while in Australia under the resides test.

As you are considered to be a resident under the resides test there is no reason to consider the other tests.