Edited version of your written advice

Authorisation Number: 1012731562073

Ruling

Subject: Residency - arriving in Australia

Question and answer

Were you a resident of Australia for taxation purposes for the 2014 income year?

Yes.

This ruling applies for the following periods:

Year ended 30 June 2014

The scheme commenced on:

1 July 2013

Relevant facts and circumstances

You were born in Country X.

You are a citizen of Country X.

Prior to arriving in Australia you were living in Country X.

You arrived in Australia 20XX

You live in various accommodation while in Australia mainly in one location.

You worked for various employers for periods of up to 6 months.

You entered Australia on a temporary visa.

The visa did not allow you to remain in Australia permanently.

The purpose of your visit was a working holiday.

You left Australia 20YY due to a family emergency.

This was your first visit to Australia.

You live with your parents in Country X.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Subsection 995-1(1).

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

Residency

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.

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;

• 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.  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 (ordinary concepts) test

The outcomes of several Administrative Appeals Tribunal (AAT) cases have determined that the word 'resides' should be given the widest meaning and there have been a number of factors identified which can assist in determining if a particular taxpayer is a resident of Australia under this test.

Recent case law decisions have considered the following factors in relation to whether the taxpayer was a resident under the 'resides' test:

(i) Physical presence in Australia

(ii) Nationality

(iii) History of residence and movements

(iv) Habits and "mode of life"

(v) Frequency, regularity and duration of visits to Australia

(vi) Purpose of visits to or absences from Australia

(vii) Family and business ties to different countries

(viii) Maintenance of place of abode.

These factors are similar to those which the Commissioner has said are relevant in determining the residency status of individuals in IT 2650 and Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia.

It is important to note that not one single factor is decisive and the weight given to each factor depends on individual circumstances.

You are a citizen of the Country X.

You came to Australia 20XX on Working Holiday visa (subclass 417). This visa is for people who want to holiday and work in Australia for up to a year. A second working holiday visa can be provided if certain conditions are satisfied.

During you stay in Australia you lived in different residences.

Between April 20XX and Jan 20YY you worked for a small number of employers.

You were required to go back to Country X in early 20YY due to a family emergency.

You lived with your parents in Country X

You were physically present in Australia for over 9 months and one long term accommodation for most of your stay.

You only returned home because of a family emergency.

Based on the facts above you are in a similar position to that in example 3 of TR 98/176 and you were residing in Australia according to ordinary concepts for the 20YY income year.

The domicile test

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.

Your domicile of origin is Country X.

You are not a permanent resident or citizen of any other country. Therefore your domicile is not Australia and you are not a resident under this test.

The 183-day 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 the Commissioner is satisfied that your usual place of abode is outside Australia, the 183 day test does not apply.

The superannuation test

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 are not an Australian citizen, this test will not be considered.

Your residency status

You were a resident of Australia for taxation purposes for the 20XX income year.