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Edited version of your written advice
Authorisation Number: 1012667510354
Ruling
Subject: Residency
Question 1
Are you a resident of Australia for taxation purposes?
Answer
Yes.
Question 2
Are you a temporary resident of Australia for taxation purposes?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2014
The scheme commenced on
1 July 2013
Relevant facts and circumstances
You will be in Australia for 187 days.
You are on a training and research 402 visa.
Your spouse has travelled with you.
You are working as a clinical fellow
You have entered a lease for the duration of your stay.
Relevant legislative provisions
Section 995-1(1) of the Income Tax Assessment Act 1997
Subsection 6(1) of the Income Tax Assessment Act 1936
Subsection 30(2) of the Migration Act 1958
Subsection 7(2) of the Social Security Act 1991
Reasons for decision
Temporary resident
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.
Subsection 30(2) of 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 subsection 7(2) of 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 she is not an Australian citizen or a holder of a permanent resident visa.
Accordingly, you are a temporary resident of Australia. It is also necessary to examine whether you are a resident of Australia of tax purposes or not according to normal principles to determine the applicable tax rates.
Australian residency
An Australian resident for tax purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). The terms resident and resident of Australia, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936, which provides four tests to ascertain whether a taxpayer is an Australian resident for income tax purposes. These tests are:
1. The resides test;
2. The domicile test;
3. The 183 day test; and
4. The superannuation test.
The first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - Permanent place of abode outside Australia.
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 an Australian resident for tax purposes if they satisfy the conditions of one of the three other tests.
The resides test considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. 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'.
In your case, you and your spouse have leased a property in Australia while you are working. You are residing in Australia according to the ordinary meaning of 'reside' and therefore you are a resident of Australia under this test.
Your residency status
You are a resident of Australia under the resides test for the period of time you are in Australia. You are also a temporary resident of Australia for the same period.
Additional Information
As a temporary resident you are only assessable on your income from Australian sources, that is any income received from outside Australia is not assessable in Australia.