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Edited version of private advice
Authorisation Number: 1051502242912
Date of advice: 7 May 2019
Ruling
Subject: Residency of Australia for taxation purposes - employer overseas
Question
Are you a resident of Australia for the financial year ended 30 June 2018?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You were previously living and working in Country Z.
Your employer agreed to an arrangement where you would work from home in Australia.
The duties of your employment require you to occasionally travel back to Country Z for meetings.
During the 20XX-XX financial year you made trips to Country Z, spending less than 183 days overseas.
On the basis of the arrangement with your employer you moved to Australia mid 20XX.
The Visa granting you entry to Australia is a Permanent Resident Visa.
You are living in rental accommodation with your spouse and children in Australia.
You jointly own an investment property in Australia.
You employer continues to pay your salary into a Country Z bank account in Country Z currency.
Relevant legislative provisions
Income Tax Assessment Act 1936 subsection 6(1)
Income Tax Assessment Act 1997 subsection 995-1(1)
Reasons for decision
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 offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are the:
· the resides test,
· the domicile test,
· the 183 day test, and
· the superannuation 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.
Where an individual does not reside in Australia according to ordinary concepts, they may still be considered to be an Australian resident if they meet the conditions of one of the other tests.
The resides (ordinary concepts) test
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'.
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) purposes 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.
In your case:
· You live with your spouse and children in Australia.
· You live with your family in a rental home.
· You have family ties to the Australian community.
· You jointly own a property in Australia.
· You spend the majority of your time in Australia.
· Your visa provides you with permanent residency in Australia.
· You exhibit the normal habits and 'mode of life' of a person living and residing in Australia rather than behaviour indicative of being a temporary visitor.
Based on these facts, it is evident that you have enough of a connection with Australia to establish that you are a resident from July 20XX.
Consequently you were residing in Australia according to the ordinary meaning of the word. Therefore, you meet the 'resides test' and are a resident of Australia for tax purposes.
Your residency status
As you will be a resident under the 'resides test' there is no need to consider the remaining three tests, and you are a resident of Australia for income tax purposes under subsection 6(1) of the ITAA 1936.