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Edited version of your written advice
Authorisation Number: 1051373919675
Date of advice: 15 May 2018
Ruling
Subject: International - residency – arriving in Australia
Question
Are you a resident of Australia for taxation purposes for the 201X income year?
Answer
Yes
This ruling applies for the following periods:
Year ending 30 June 201X
Year ending 30 June 201X
The scheme commences on:
20 April 201X
Relevant facts and circumstances
You are a citizen of Country Y.
You work on a ship which is registered in an overseas country.
You came to Australia for medical treatment.
You stayed with your sibling in Australia throughout your treatment and recuperation.
You required assistance from your sibling and friends during the time you were in Australia.
Prior to coming to Australia you lived with your parents in Country Y.
You have a rental property in Australia which you now live in.
Relevant legislative provisions
Income Tax Assessment Act 1997 Sub-section 995-1(1)
Income Tax Assessment Act 1936 Sub-section 6(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.
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 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.
You came to Australia for medical reasons in the 201X income year.
You were in Australia for more than 183 days.
You lived with your sibling in Australia
Based on the facts above you were residing in Australia according to ordinary concepts from XX April 201X to XX April 201X.
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 ‘183 day’ test as an alternative argument.
The 183-day test
Where a person is present in Australia for 183 days during the year of income the person will be a resident, unless the Commissioner is satisfied that the person’s usual place of abode is outside Australia and the person does not intend to take up residence in Australia.
You were in Australia for more than 183 days in the 201X income year.
The Commissioner is not satisfied that your usual place of abode was outside Australia in the 201X income year and that you did not intend on taking up residence in Australia as you are now living in Australia and are a resident for taxation purposes.
You were a resident under this test in the 201X income year.
Your residency status:
You were a resident of Australia for taxation purposes in the 201X income year.
ATO view documents
Taxation Ruling TR 98/17
Taxation Ruling IT 2650