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Edited version of your written advice
Authorisation Number: 1051350939720
Date of advice: 20 March 2018
Ruling
Subject: Residency
Question
Have you been an Australian tax ‘resident’ under section 6(1) of the Income Tax Assessment Act 1936 (ITAA 36) from Date M?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You came to Australia on a business visa about XY years ago along with your immediate family (your spouse and two of your children).
You still had business interests in Country X and you therefore continued to spend a significant amount of time there.
Your immediate family remained in Australia.
You retired from your business activities in Country X some time later, after which you began to spend more time in Australia.
You continue to own an apartment and a house in Country X and you spend time between both dwellings when you are in the country.
You purchased an apartment in Australia in late 20XY, which has been your residence and that of your family.
Your assets in Australia include the Australian family home, XY units and a number of bank accounts.
Your immediate family members were each granted Australian permanent resident status and subsequently granted citizenship
Your expectation is that you will spend more than 183 days in Australia during the current income year
You have an Australian drivers licence and Australia Medicare card.
You acquired private health insurance in Australia.
Neither you nor your spouse is a member of a Commonwealth Government Superannuation Scheme.
Relevant legislative provisions
Income Tax Assessment Act 1936, Section 6(1)
Income Tax Assessment Act 1936, Section 6-5
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 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, we note the following:
● From Date M you have spent a significant amount of time in Australia and have lived with your family in the home that you own.
● You retired from your business ties in Country X in or around late 20XY.
● Your immediate family members are Australian citizens.
● You have an Australian driver’s licence and Australian Medicare card.
● You have acquired private health insurance in Australia.
Based on the above facts, you have established a settled routine in Australia which you intend to continue. Whilst you continue to have ties in Country X, and you have spent periods of time there in recent years, the bulk of your personal ties and financial assets have remained in Australia.
Therefore, you are residing in Australia according to ordinary concepts and are a resident under the ‘resides test’.
As you have satisfied this test, none of the other tests need be applied.