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Ruling
Subject: Residency
Question and answer:
Did you become a resident of Australia for income tax purposes from the day you decided to live permanently in Australia?
Yes.
This ruling applies for the following periods
Year ended 30 June 2013
The scheme commences on
1 July 2012
Relevant facts and circumstances
You entered Australia with your Australian born spouse in late 2012.
Your initial intention was to holiday in Australia for a number of days.
After your arrival, you and your spouse decided to stay in Australia permanently and began looking for permanent accommodation.
You signed a lease on a rental property.
You have recently signed a X month lease on another rental property.
You applied for a migration visa and were granted a bridging visa until the migration visa was processed.
You are looking for employment, are studying for a driver's licence, have joined a gym, have received a Medicare card and have been included on your spouses private health insurance policy.
Relevant legislative provisions
Income Tax Assessment Act 1936 - subsection 6(1)
Income Tax Assessment Act 1997 - section 6-5
Reasons for decision
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.
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 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. None of the other tests need be applied if the 'resides test' is satisfied.
The ordinary meaning of the word 'reside', 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'.
The Commissioner's view on the 'resides test' is contained in Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia.
An individual may be considered a resident under the 'resides test' if their behaviour while they are here is such that they exhibit a degree of continuity, routine or habit that is consistent with a person residing in Australia according to the ordinary meaning of the word 'reside'.
As a broad principle, where a person has a settled routine for six months or more (for example, the person has stayed in one place or has been with one employer for six months at the same location) they may satisfy the 'resides test'. Furthermore, a migrant who comes to Australia intending to reside here permanently is a resident from arrival.
In your case, you arrived in Australia with your spouse and shortly after decided to live here permanently. You have established a place of residence in Australia and have exhibited behaviour consistent with residing in Australia.
Therefore, you have satisfied the 'resides test' of residency and none of the other tests need be applied.
You are an Australian resident for income tax purposes from the time you intended to reside here permanently.