Edited version of your private ruling

Authorisation Number: 1012452288674

Ruling

Subject: Residency status

Question

Are you an Australian resident for taxation purposes?

Answer

Yes.

This ruling applies for the following period

Year ending 30 June 2012

The scheme commenced on

1 July 2011

Relevant facts

You are a citizen of country A.

Your country of origin is country A.

You have visited Australia on a number of occasions.

The first couple occasions were on tourist visas.

After your trip a few years ago, you applied for a permanent visa to come and live in Australia. The processing of your visa application took one and a half years and your visa was granted in 20XX You passed the relevant medical examinations for your visa application. You paid money to Australian Immigration for your visa.

You arrived in Australian in 20YY.

You sold your home in country A before coming to Australia in 20YY

You have no assets or close family or ties in country A.

During your visit to Australia you established bank accounts and lived with a relation. You also lived with your relation on your previous visits to Australia.

Soon after your arrival you needed medical treatment.

When medical treatment was required in 20YY, you tried to obtain treatment in Australia, however the waiting list was too long and you couldn't speak English. As your doctor in country A knew your medical background, you decided to return to country A for treatment. The waiting list was not long in country A.

You departed Australia a few weeks after your arrival in 20YY due to medical reasons.

You lived in a relation's house while in country A.

While in country A, further medical problems arose and further treatment was received.

As soon as the doctors advise that you are fit to travel, you will come back to Australia to live. You are only in country A temporarily for medical reasons.

You plan to return to Australia in the near future.

It is your intention to live permanently in Australia. You want to live near your relation in Australia as you have no close family in country A.

You transferred money into your Australian bank account.

You do not have a bank account in country A. You closed your bank account in country A when you obtained an Australian permanent residency visa.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 995-1.

Income Tax Assessment Act 1936 subsection 6(1).

Reasons for decision

Residency

Residency status is a question of fact. Your residency status is relevant in determining your liability to Australian income tax.

The term Australian resident is defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) to mean a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

Subsection 6(1) of the ITAA 1936 provides four tests to determine whether a person is a resident of Australia for income tax purposes. These tests are:

· the resides test;

· the domicile and permanent place of abode test;

· the 183 day test; and

· the Commonwealth superannuation fund 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 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 Macquarie Dictionary defines reside as to dwell permanently or for a considerable time, have ones abode for a time.

The Shorter Oxford English Dictionary defines reside as to dwell permanently, or for a considerable time, to have ones settled or usual abode, to live in or at a particular place.

The period of physical presence in Australia is not by itself decisive when determining whether an individual resides here. All the facts and circumstances that describe an individual's behaviour in Australia are relevant in determining the residency status. No single factor is necessarily decisive. The following factors are useful when determining whether a person is residing in Australia:

· intention or purpose of presence,

· family and/or employment ties,

· maintenance and location of assets, and

· social and living arrangements.

In your case, you came to Australia on a permanent resident visa. Due to your medical condition you left Australia a few weeks after your arrival. Although your intention is to live in Australia permanently you have not had an extended physical presence here. It is also acknowledged that you have family in Australia and your bank account is in Australia. However, as you have not been here for a considerable time, we do not consider that you are residing in Australia.

As you do not satisfy the 'resides test' it is necessary to consider the other residency tests.

The domicile test and permanent place of abode

If a person is considered to have their domicile in Australia they will be considered an Australian resident unless the Commissioner is satisfied they have a permanent place of abode outside of Australia.

In order to show that a new domicile of choice has been adopted, the person must be able prove an intention to make his or her home indefinitely in that country.

In your case, you have applied for and received a permanent resident visa to live in Australia. You sold your home in country A and transferred all your money to an Australian bank account. As you intend to make your home in Australia, it is considered that your domicile is here.

A permanent place of abode does not have to be 'everlasting' or 'forever'. It does not mean an abode in which a person intends to live for the rest of his or her life. 

The expression 'place of abode' refers to a person's residence, where one lives with one's family and sleeps at night. In essence, a person's place of abode is that person's dwelling place or the physical surroundings in which a person lives.

Taxation Ruling IT 2650 provides that the following factors are considered in determining a taxpayer's permanent place of abode:

· the intended and actual length of stay in the overseas country

· any intention to stay in the overseas country only temporarily and then either to return to Australia at some definite point in time or to travel to another country

· the establishment of a home outside Australia

· the abandonment of any residence or place of abode in Australia

· the duration and continuity of presence in the overseas country, and

· the durability of association with a particular place in Australia.

In your case your return to country A is only temporary due to medical reasons. As your medical condition was the only reason for you travelling to country A, it is not considered that you established a permanent place of abode in country A while undergoing medical treatment. You do not own a home in country A and have no close family or assets in country A. You intend to return to Australia to live as soon as it is possible. These facts show that you do not have a permanent place of abode in country A.

As you do not have a permanent place of abode outside Australia during the 2011-12 income year, and your domicile is in Australia, you are considered to be a resident of Australia for income tax purposes under the domicile test. 

As you satisfy the domicile test, there is no need to consider the other two tests.