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Edited version of your private ruling
Authorisation Number: 1012466822837
Ruling
Subject: Residency
Question 1
Are you a resident of Australia for taxation purposes?
Answer
Yes.
Question 2
Will the resident tax rates apply to your employment income?
Answer
Yes.
This ruling applies for the following periods:
Year ending 30 June 2013.
The scheme commences on:
1 July 2012.
Relevant facts and circumstances
You were born in and are a citizen of country X.
You have accompanied your spouse to Australia.
You do not intend to stay in Australia on a permanent basis.
You will be leaving Australia at the end of your spouse's work contract.
You rent a house in Australia.
You have a bank account in Australia.
You own your own home in country X. This property is not being rented out while you are in Australia.
In addition to your house you have a car and bank accounts in country X.
You have a job in Australia.
Your job in country X is being held for you until you return.
Your children have also accompanied you and your spouse to Australia.
Neither you nor your spouse are currently Australian Government employees.
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)
Income Tax Rates Act 1986
Reasons for decision
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 considered to 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 individuals behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here.
In your case, you are living with your family and working in Australia, and expect to continue to do for a few years. This suggests a degree of continuity, routine or habit over a reasonable length of time that is consistent with residing here. Therefore you are a resident under this test.
As you meet the resides test there is no need to consider the other three tests.
Your residency status
You are a resident of Australia for taxation purposes.
Tax Rates
The following rates for 2012-13 apply from 1 July 2012 for resident taxpayers.
Taxable income |
Tax on this income |
0 - $18,200 |
Nil |
$18,201 - $37,000 |
19c for each $1 over $18,200 |
$37,001 - $80,000 |
$3,572 plus 32.5c for each $1 over $37,000 |
$80,001 - $180,000 |
$17,547 plus 37c for each $1 over $80,000 |
$180,001 and over |
$54,547 plus 45c for each $1 over $180,000 |
The above rates do not include the Medicare levy of 1.5%.
As you are a resident of Australia for taxation purposes, your worldwide income (including your income from employment) will be taxed at these rates of tax.