Edited version of your private ruling

Authorisation Number: 1012480302541

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for tax purposes from the date of your permanent residency visa?

Yes.

This ruling applies for the following period

Year ended 30 June 2013

Year ended 30 June 2014

The scheme commenced on

1 July 2012

Relevant facts

You are citizens of country A and country A is your country of origin.

In Australia you hold a permanent residency visa.

From a certain year you entered Australia on a bridging visa.

You were issued a Permanent Residency Visa later.

You live in a retirement village when you are in Australia.

While you are in Australia you live close to your child and have a regular day to day living routine. You have made some short trips interstate for certain reasons.

In Australia your assets include:

· Bank accounts

· Property

· Motor vehicle

Assets held in countries other than Australia include

· property in country C

· bank accounts in country C

· motor vehicle in country C

· bank accounts in country A

· property in country B

· bank accounts in country B

· motor vehicle in country B.

None of your existing homes are rented out while you are absent.

Your property in country B is annexed to one of your children's property.

You intend staying at the country B property for only a few months per year.

It is your intention to reside permanently in Australia but your current commitments limit this to less than 183 days per annum.

You have spent time in Australia intermittently for the financial years, but less than 183 days per annum.

You have never been a Commonwealth Government of Australia employee.

You are over 16 years of age.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 995-1

Reasons for decision

Residency

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.  If the primary test is satisfied the remaining three tests do not need to be considered as residency for Australian tax purposes has been established.

The resides test

The ordinary meaning of the word 'reside', according to the Macquarie Dictionary, 2001, rev. 3^rd 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'.

 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.

Whether a considerable time has elapsed to demonstrate that the individual's behaviour has the required continuity, routine or habit is a question of fact; that is, it depends on the circumstances of each case. The Commissioner's view of the law is that six months is a considerable time when deciding whether the individual's behaviour is consistent with residing here.

As your period of physical presence in Australia is less than 6 months in each financial year and is intermittent, the Commissioner is not satisfied that you have had an adequate amount of time to establish a sufficient degree of regularity, routine or habit that is consistent with residing in Australia. Therefore, you are not considered to be a resident under this test.

The domicile test

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.

A person's domicile is generally their country of birth. This is known as a person's 'domicile of origin'. A person's domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice.

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

You are a citizen of the country A. However, you have obtained an Australian permanent Residency Visa. The action and intention of obtaining permanent residency resulted in you obtaining a new domicile of choice, that is, a domicile that is Australia.

The expression 'place of abode' refers to a person's residence, where they live with their family and sleep 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.

 While a permanent place of abode does not have to be everlasting or forever, it does require more than a short term stay. In Applegate's case (FC of T v Applegate 79 ATC 4307), the Federal Court noted that a permanent place of abode should be contrasted with a temporary or transitory place of abode outside Australia. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has his or her usual place of abode there.

In your case, you have a property in Australia which you live in when you are here and it is your intention to spend the majority of your time living in Australia in the near future. You also have properties in country B and Country C which you live in for short periods when you are not in Australia. In your case you have transitory or temporary places to live outside Australia which are not permanent places of abode.

The Commissioner is satisfied that you do not have a permanent place of abode overseas and as you have an Australian domicile, you are a resident of Australia for tax purposes under this test.

Conclusion

As you have passed the domicile test, you are a resident of Australia for tax purposes under section 6(1) of the ITAA 1936. Accordingly, there is no need to consider the remaining tests of residency.