Edited version of your written advice

Authorisation Number: 1051373005265

Date of advice: 21 May 2018

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes?

Answer

Yes.

This ruling applies for the following period:

Income year ended 30 June 201X

Income year ended 30 June 201X

Income year ended 30 June 201X

The scheme commenced on:

1 January 201X

Relevant facts and circumstances

Your country of origin is a foreign country.

You are a citizen of a foreign country.

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

You first arrived in Australia on a tourist visa in 20XX and later holding a temporary working visa.

Before becoming a permanent resident of Australia, you were holding a temporary business visa.

You first arrived in Australia for travelling purposes. The second arrival was for work as you were holding a working visa. Later you decided to start a business in Australia with an intention to migrate to Australia with your family permanently.

Since arrival in Australia, you have applied for permanent residency. A Permanent Residency (PR) Visa was granted in 20XX. The reason for applying for PR was because you wanted to permanently migrate to Australia with your family.

You have not lodged any foreign income tax returns in the last three years. You are no longer working in any country other than Australia.

You were diagnosed with an illness while in a foreign country and are undergoing treatment in a foreign country until 20XX. You will not be able to come back to Australia until the current treatment is finished. However, the family has arranged with to continue your treatment when you return to Australia in 20XX.

Family and social connections

You have other family members who live in Australia.

You did not live in Australia for more than 183 days per year for the past few financial years as you needed to care for a relative who is living in a foreign country and is aged.

You have developed professional, social or sporting connections in Australia:

● You live with your spouse in Australia

● You look after children in your free time

● You are a member of an Australia organisation.

You have not maintained any professional, social or sporting connections with a foreign country since you migrated to Australia and your permanent residency.

Accommodation and assets

Your Australian accommodation:

● You purchased a piece of land in Australia after your permanent residency visa was granted.

● Prior to purchasing the land, you owned another property which was the family home. This was your main residence for X years. You and your spouse lived in this property while you were employed and later ran your own business. This property was sold when you moved to your new family home built on the land you purchased.

● You later purchased another property for your own use as well.

You have always lived with your spouse in your own houses located at the above listed two addresses.

Prior to your arrival in Australia you lived with your family in their own property in a foreign country.

You own an apartment in a foreign country which is available for your use. The main reason you have not sold it is because you want to help a relative to have a place to stay as they do not own a property in a foreign country.

You own an asset outside Australia: a bank account with a balance of around $X AUD.

Your assets in Australia include:

● You jointly owned house (with your spouse).

● You also jointly own assets in yours and your spouse’s superannuation funds.

Income and employment

You receive some interest income from your savings in your bank account in a foreign country. The income has been less than $X AUD per year.

While in Australia you do not have an employment position or job being held in any overseas country.

Your employment in Australia:

● You are a director and shareholder of a company. You have been working in the company since 20XX.

● You also work for another company as a senior consultant on property development projects. You have been working in this role for several years.

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

You have never been enrolled in any course of study while in Australia that was for more than six months.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 995-1(1)

Income Tax Assessment Act 1936 Section 6(1)

Reasons for Decision

Residency for taxation purposes

Section 995-1 of the Income tax Assessment Act 1997 (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.

If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.

The resides test is the primary test for determining the residency status of an individual for taxation purposes. If residency is established under the resides test, the remaining three tests do not need to be considered. However, if residency is not established under the resides test, an individual will still be a resident of Australia for taxation purposes if they meet the conditions of one of the other three tests.

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.

In Dempsey and Commissioner of Taxation [2014] AATA 335 (29 May 2014) the Administrative Appeals Tribunal noted that the settled position of the courts (at ultimate appellant level) as to the meaning of the word resides in the ITAA 1936 is that the word:

bears its ordinary English meaning, which 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”.

Based on the facts of your case, the Commissioner accepts that you will be a resident of Australia according to the ordinary meaning of the word resides for the period of the ruling.

Whilst it is not necessary to meet more than one test to determine residency for tax purposes (we have already established that you are a resident under the resides test), we will also include a discussion of the ‘domicile and permanent place of abode’ test as an alternative argument.

The domicile test

Under this test, a person whose domicile is in Australia will be considered a resident of Australia for taxation purposes; unless the Commissioner is satisfied the person’s permanent place of abode is outside Australia.

A person’s domicile is generally their country of birth. This is known as a person’s ‘domicile of origin’. A person’s domicile of origin will not usually change, but can in some circumstances. For example, a person can acquire a domicile in another country by choice.

In order to acquire a new domicile by choice, a person must have an intention to make their home indefinitely in a country outside their domicile of origin. Sufficient proof of such an intention is considered to exist in cases where a person is granted permanent residency, or becomes a citizen of a country outside of their domicile of origin.

You will be a resident of Australia under domicile test for the period of the ruling because, although your country of origin is a foreign country and you remain a citizen of a foreign country, since your arrival in Australia you have taken steps to make Australia your domicile of choice by applying for and receiving permanent residency status with the intention of migrating permanently to Australia with your family. Therefore you are also a resident of Australia under the domicile test of residency.

There is no need to consider the 183-day and Superannuation tests.

Conclusion – your residency status

Based on the facts you have provided, you will satisfy two of the tests of residency outlined in subsection 6(1) of the ITAA 1936 for the period of the ruling. Accordingly, you will be a resident of Australia for taxation purposes during the period of the ruling.