Edited version of your private ruling

Authorisation Number: 1012581568098

Ruling

Subject: INTL - residency - temporary resident

Question 1

Are you a temporary resident of Australia for income tax purposes?

Answer

Yes.

Question 2

Are you an Australian resident for income tax purposes?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2013.

The scheme commences on:

December 20XX.

Relevant facts and circumstances

· You are a citizen of an overseas country.

· You arrived in Australia in late 20XX.

· You arrived in Australia for employment purposes.

· You arrived in Australia on a 457 Temporary Work (Skilled) Visa.

· Your Visa expires in 20YY.

· You plan on renewing your Visa before it expires.

· Your spouse accompanied you to Australia.

· You intend to stay in Australia for a few years.

· You have a family home in an overseas country.

· Your family home is owned by your parent and your entire family including parents and siblings live in this home.

· You returned to the overseas country for approximately Z weeks.

· You returned to the overseas country for two reasons, firstly, due to work and secondly, for family reasons. Your spouse has been staying with his/her parents after returning to the overseas country.

· You returned to Australia without your spouse.

· You are living in rented accommodation in Australia.

· You lived with your spouse in the rented accommodation before he/she returned to the overseas country.

· You maintained your bank accounts in the overseas country.

· You have Australian bank accounts.

· You have an Australian superannuation account.

· You are married with one child.

· Your child was born recently.

· Your immediate family are citizens of the overseas country.

· Your wife and child are currently still in the overseas country.

· You are currently applying for a Visa for your child so that your spouse and child can return to Australia soon.

· You do not have any sporting or community connections with Australia.

· You have not held a position with the Australian Commonwealth Government and you are over the age of 16.

· You did not advise any Australian bank that you hold accounts with that you were a non-resident.

· You have not lodged a tax return in the overseas country as it will be based on your income in Australia.

Relevant legislative provisions

Section 6(1) of the Income Tax Assessment Act 1936.

Section 995-1 of the Income Tax Assessment Act 1997.

Reasons for decision

Question 1

Summary

As you satisfy the conditions for a temporary resident as defined in subsection 995-1(1) of the ITAA 1997, you are considered to be a temporary resident of Australia for income tax purposes.

Detailed Reasoning

A temporary resident as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) is a person:

· who holds a temporary visa granted under the Migration Act 1958, and

· who is not an Australian resident within the meaning of the Social Security Act 1991, and

· whose spouse is not an Australian resident within the meaning of the Social Security Act 1991.

The Migration Act 1958 provides that a temporary visa is a visa to travel to and remain in Australia:

· during a specified period,

· until a specified event happens, or

· while the holder has a specific status.

Temporary visas are distinguished from permanent visas which allow a person to remain in Australia indefinitely.

Under the Social Security Act 1991, an Australian resident is a person who resides in Australia and is either an Australian citizen or holds a permanent resident visa.

In your case:

· you hold a temporary resident visa granted under the Migration Act 1958,

· you are not an Australian resident within the meaning of the Social Security Act 1991 because you are not an Australian citizen or holder of a permanent resident visa, and

· your spouse is not an Australian resident within the meaning of the Social Security Act 1991, as he/she is not an Australian citizen or a holder of a permanent resident visa.

Question 2

Summary

Based on the information you have provided, it is considered that you are an Australian resident for income tax purposes from the date you entered Australia, as your behaviour in Australia reflects a degree of continuity, routine or habit that is consistent with residing here.

Detailed Reasoning

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.

The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the:

· 'resides' test (ordinary concepts test)

· domicile and permanent place of abode test;

· 183 day test; and

· Commonwealth superannuation fund test.

The primary test for deciding the residency status of each individual is whether they reside in Australia according to the ordinary meaning of the word resides.  Where it is determined that a taxpayer 'resides in Australia' in accordance with the first test, there is no requirement to consider the other tests. The other three tests operate to broaden the definition of resident beyond the 'resides' test.

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 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.

In your case, it is considered that you are an Australian resident for tax purposes under 'the resides test' for the following reasons:

· You arrived in Australia with your spouse in late 20XX with the intention to reside in Australia for a few years.

· Your Visa expires in 20YY and you plan on renewing your Visa before it expires to remain in Australia for the full perio.

· You returned to the overseas country for approximately Z weeks for two reasons, firstly, due to work and secondly, family reasons.

· You returned to Australia without your spouse.

· You are living in rented accommodation in Australia.

· You lived with your spouse in the rented accommodation before he/she returned to the overseas country.

· You are currently applying for a Visa for your new born child so that your spouse and child can return to Australia and re-join you.

Based on the information you have provided, it is considered that you are an Australian resident for income tax purposes from the date you entered Australia, as your behaviour in Australia reflects a degree of continuity, routine or habit that is consistent with residing here.

Whilst is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the resides test), we will also include a discussion of the domicile and permanent place of abode, 183 day; and Commonwealth superannuation fund tests as an alternative argument.

Other residency tests

Even where a taxpayer is not considered to 'reside' in Australia in accordance with the ordinary meaning of the term, the taxpayer will still be considered to be a resident of Australia for domestic taxation purposes where they meet one of the other three residency tests, being the 183 day test, superannuation fund test and domicile and permanent place of abode tests.

Domicile and permanent place of abode

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.

Taxation Ruling IT 2650 residency - permanent place of abode outside Australia states that persons leaving Australia temporarily would generally be considered to have maintained their Australian domicile unless it is established that they have acquired a different domicile of choice or by operation of law. 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 e.g., through having obtained a migration visa. A working visa, even for a substantial period of time such as 2 years, would not be sufficient evidence of an intention to acquire a new domicile of choice.

In your case, you were born in an overseas country and therefore your domicile of birth is in that country. Thus, this test is not relevant to your circumstances as your domicile is not Australia.

183 days 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.

As you were not in Australia for a period of 183 days during the relevant income year this test is not relevant to your circumstances.

Superannuation funds tests

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.

As you have never been an employee of the Australian government and your spouse is not eligible to contribute to the PSS or the CSS, the superannuation test does not apply to your circumstances.

Further issues for you to consider

You are assessable in Australia on all employment-related income earned during the period of temporary residence in Australia, including any that is foreign-sourced.