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Edited version of your private ruling
Authorisation Number: 1012450329972
Ruling
Subject: Residency
Question and answer
Were you a resident of Australia for taxation purposes for the period you were in Australia on a working holiday?
No.
Do the non-resident rates of tax apply to the income you derived while in Australia?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2012
The scheme commenced on:
1 July 2011
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You were born overseas.
You are a citizen of an overseas country.
You came to Australia on a working holiday.
You had a working holiday visa for 12 months.
You were in Australia for a couple of months.
You intended to stay for the duration of the visa which was 12 months and then return home to.
You stayed with friends for the period you were in Australia.
You intended to travel around Australia working.
You did not have a work contract in Australia and only worked when required from week to week.
You lived with your family overseas prior to coming to Australia.
You return to live with your family when you returned overseas.
You had no social or sporting connections with Australia.
You had no assets in Australia.
You do not have a spouse and no family members accompanied you to Australia.
You are not currently or have ever been a Commonwealth Government employee.
Relevant legislative provisions:
Income Tax Assessment Act 1936 Subsection 6(1).
Income tax Assessment Act 1997 Section 6-5.
Income Tax Assessment Act 1997 Subsection 995-1(1).
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 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.
However, where an individual does not reside in Australia according to ordinary concepts, they may still be a resident of Australia for tax purposes if they meet the conditions of one of the other three tests.
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 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 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 determining whether your behaviour over the time spent in Australia reflects a degree of continuity, routine or habit that is consistent with residing here:
(a) intention or purpose of presence;
(b) family and business/employment ties;
(c) maintenance and location of assets; and
(d) social and living arrangements
You came to Australia on a working holiday.
Your stay was cut short due to family reasons.
You lived with friends for the period you were in Australia.
You intended to travel around Australia working.
You intended to leave at the end of your working holiday visa and return to home.
You were not residing in Australia according to ordinary concepts for the period you were in Australia as you were not living in Australia on a permanent basis.
You intended to return home at the end of your visa. You were living with friends and intended to travel around Australia working. You are not a resident under this test.
The domicile test
If a person has their domicile in Australia they will be an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.
Your domicile of origin is an overseas country. You had no intention of making Australia your permanent home and changing your domicile. Therefore your domicile is not Australia and you are not a resident under this test.
The 183-day test
Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and the person does not intend to take up residence in Australia.
You were not in Australia for more than 183 days. You are not a resident under this test.
The superannuation test
An individual is still considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee.
This test does not apply to you. You are not a resident under this test.
Your residency status
You were not a resident of Australia for taxation purposes for the period you were in Australia on a working holiday. As a non-resident of Australia any income derived in Australia is taxed at the non-resident rates.