Edited version of your written advice

Authorisation Number: 1012976873060

Date of advice: 8 April 2016

Ruling

Subject: Residency

Question and answer

Are you a resident of Australia for taxation purposes?

Yes.

This ruling applies for the following periods

Year ending 30 June 2015

The scheme commenced on

1 July 2014

Relevant facts and circumstances

General

Your country of origin is a foreign country of which you are a citizen.

In the years prior to your arrival in Australia you lived in a foreign country.

You entered Australia on a type of visa. You next applied for and were granted another type of visa. Your visas did not grant you the right of permanent residency in Australia.

During your time in Australia you left Australia for a short period for a vacation and for lodging a residency application from overseas.

You had previously entered Australia on a short term lease. The purpose of the visit was to meet people.

You lodged a tax return in a foreign country while in Australia in which you stated a foreign country residency your tax residency status.

Family and social connections

You do not have any dependents.

Your spouse (an Australian citizen) accompanied you to Australia.

You did not develop any professional, social or sporting connections (e.g. sporting or social clubs, church groups, etc.) in Australia.

You did not maintain any professional, social or sporting connections with a foreign country.

Accommodation and assets

On first arriving in Australia you lived in a rented house on a short term lease.

Prior to your arrival in Australia you were renting an apartment with friends in a foreign country. You do not own your own home overseas.

You have a permanent home available for your use in a foreign country: your parents' home.

Your only asset outside Australia was a bank account. It had an average balance of less than $X.

You and your spouse have a joint Australian bank account.

Income and employment

You receive income from sources outside of Australia. You do some online work as a contract laborer for a foreign organisation and received small amounts periodically. You are not sure how much of those payments were received during the Australian income year because a foreign country income year is different to Australia's.

Regarding your employment in Australia:

• The type of work was administration.

• You employment was temporary.

• You have ceased working for this employer because of overseas travel.

Neither you nor your spouse has ever been a Commonwealth of Australia Government employee for superannuation (super) purposes.

You were not enrolled in any course of study while in Australia that was for more than six months.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Subsection 995-1(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 (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 first two tests are examined in detail in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia (IT 2650).

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 a resident of Australia for tax purposes if they meet the conditions of one of the other three tests.

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.

There are several factors outlined above which indicate that you have not ceased to be a resident of Australia, specifically:

• Your country of origin is a foreign country of which you are a citizen.

• You entered Australia on visas which do not allow you to stay in Australia permanently.

• You were in Australia except for a few days for a vacation and to allow you to lodge your application for residency from overseas.

• You previously entered Australia on a short term visa to meet people.

• Your spouse (an Australian citizen) accompanied you to Australia.

• You do not have any dependents.

• You did not develop any professional, social or sporting connections with Australia.

• You did not maintain any professional, social or sporting connections with a foreign country.

• You lived in a rented house on a short term lease in Australia.

• Prior to your arrival in Australia you were renting an apartment with friends in a foreign country. You do not own your own home overseas but you have a permanent home available for your use in a foreign country in your parents' home.

• You have a bank account in a foreign country.

• You and your spouse have a joint Australian bank account.

• You receive income from a foreign country. You do some online work as a contract laborer for a foreign organization and received small amounts periodically.

• You had some temporary employment in Australia. You have ceased working for this employer because of overseas travel.

Based on a consideration of all of the factors outlined above, you were a resident of Australia according to ordinary concepts as you maintained a continuity of association with Australia for the period of the ruling.

Your residency status

As you are a resident of Australia under one of the tests of residency outlined in subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997, you are considered to be an Australian resident for taxation purposes for the year of the ruling.