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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1012765587337

Ruling

Subject: Residence

Question and answer

Did you become a resident of Australia for taxation purposes in the 2015 income year?

Yes.

This ruling applies for the following periods:

Year ending 30 June 2015

The scheme commenced on:

1 August 2014

Relevant facts and circumstances

You have been working and living overseas for several years.

You were a non-resident of Australia for taxation purposes for the period you were overseas.

You ceased your employment overseas.

You formed the intention to return to Australia to live and work when you ceased your employment overseas.

Relevant legislative provisions:

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

Income Tax Assessment Act 1936 Subsection 6(1).

Reasons for decision

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.

In your case you have been living and working overseas for the past number of years.

You formed the intention to return to Australia to live and work at the end of your employment overseas.

You resumed your residency status in Australia on the date you made the decision to return to live and work in Australia.