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Edited version of your written advice
Authorisation Number: 1051215451958
Date of Advice: 19 April 2017
Ruling
Subject: Residency status
Question and answer:
Are you a resident of Australia for income tax purposes?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2017
The scheme commences on
1 July 2016
Relevant facts and circumstances
You were born in Country Y and are a citizen of Country Y.
You have a spouse and no dependants.
You arrived in Australia a number of years ago on a working holiday.
You entered Australia on a working holiday visa.
For a number of years, you have been a full time employee for the one entity.
Since your arrival you have lived in long term rental accommodation with your spouse.
Prior to leaving Australia you were living with in Country Y.
Since your arrival in Australia you have been absent from Australia once per income year for a short period. On each occasion the purpose of your trips was for a holiday.
Your overseas assets consist of a bank account.
Your assets in Australia consist of a bank account.
Your Australian sporting and social ties consist of you association with your church and a professional organisation.
You have not maintained any overseas sporting or social ties.
You and your spouse have never been employees of the Commonwealth Government of Australia.
You are unsure when you will return to Country Y.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 6(1)
Income Tax Assessment Act 1997 Section 995-1
Reasons for decision
Section 995-1 of the ITAA 1997 defines an Australian resident for tax purposes 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. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are:
● the resides test,
● the domicile (and permanent place of abode) test,
● the 183 day test, and
● the superannuation test.
The first two tests are examined in detail in TAXATION RULING NO. IT 2650 INCOME TAX: Residency - Permanent Place of Abode Outside Australia.
The latter two tests are relatively self-explanatory as they require the individual to either be physical present in Australia for a period greater than 183 days or be eligible to contribute to the PSS or CSS superannuation schemes.
If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.
The resides test
The 'resides test' considers whether an individual is residing in Australia according to the ordinary meaning of the word 'reside'. As the word 'reside' is not defined in Australian taxation law, it takes its ordinary meaning for the purposes of subsection 6(1) of the ITAA 1936.
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'.
Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia, discusses the Commissioners view on the application of the 'resides' test when determining an individual's residency status.
Paragraph 18 of Tax Ruling TR 98/17 provides;
The period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here. However, an individual's behaviour over the time spent in Australia may reflect a degree of continuity, routine or habit that is consistent with residing here.
As a broad principle, where a person has a settled routine for six months or more (for example, the person has stayed in one place or has been with one employer for six months at the same location) they may satisfy the 'resides' test.
In your case, since your arrival in Australia you have gained long term employment and lived in long term rental accommodation. From the date of your arrival, you have only been absent for a short period in each income year. In light of the above factors, the Commissioner is satisfied that this behaviour reflects a degree of continuity, routine or habit that is consistent with residing here. Therefore you are a resident of Australia for income tax purposes under the 'resides test'.
As it has been determined that you are a resident under the 'resides test' there is no need to consider the remaining 3 tests.
Your residency status
Accordingly, you are a resident of Australia for income tax purposes in the 2016-17 income year under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997.