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Edited version of your written advice
Authorisation Number: 1013114711700
Date of advice: 20 December 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 2016
The scheme commenced on
1 July 2015
Relevant facts and circumstances
General
Your country of origin is a foreign country.
You are a citizen of a foreign country.
You arrive in Australia.
The purpose of your visit is to obtain employment.
The type of visa you were granted that allowed you to enter Australia does not allow you to stay in Australia permanently.
You have applied to have the end date of your visa extended.
Since your arrival in Australia, you have not applied for citizenship or permanent residency.
You intend to reside in Australia permanently.
You departed Australia on one occasion since your arrival, for a family holiday in a foreign country.
You had previously entered Australia prior to your arrival on a holiday visa to visit your family who lived here at the time.
You have not lodged any foreign income tax returns while living in Australia.
Family and social connections
You have a spouse.
You have dependent children.
All of your family (spouse and children) accompanied you to Australia.
You have developed social and sporting connection in Australia though your children's education and their membership of local sports clubs.
You have not maintained any professional, social or sporting connections with a foreign country.
Accommodation and assets
In Australia you live in home you have purchased.
Prior to your arrival in Australia, you lived in rented dwelling in a foreign country.
While in Australia you do not own or have a permanent home available for your use in another country.
You have a bank account in a foreign country.
Your assets in Australia are: a residential property where you live, bank accounts (savings, current and mortgage accounts) and your super fund.
Income and employment
You receive income from sources outside of Australia.
While in Australia you do not still have an employment position or job being held for you in any overseas country.
Your employment in Australia has been with several employers.
Neither you nor your spouse has ever been a Commonwealth of Australia Government employee for superannuation (super) purposes.
You have 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 are a resident of Australia, specifically:
● You moved to Australia from a foreign country to live and work.
● The purpose of your visit is employment.
● Your intention is to remain permanently in Australia.
● In Australia you live in a dwelling you purchased.
● You have permanent employment in Australia. You do not have a position being held for you in a foreign country.
● Your spouse and children accompanied you to Australia.
● Since arriving in Australia you made one oversea holiday trip.
● You have not lodged any foreign income tax returns while living in Australia
● You expect some income from a source outside of Australia.
● Your have substantial assets in Australia in addition to your home but only a bank account in a foreign country.
● You have not maintained any professional, social or sporting connections with a foreign country but have developed some social and sporting connections in Australia.
Based on a consideration of all of the factors outlined above, you are 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.