Edited version of private advice

Authorisation Number: 1051702232774

Date of advice: 2 July 2020

Ruling

Subject: Residency of Australia for tax purposes

Question

Are you a resident of Australia for taxation purposes from early 20YY?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You were born in Australia.

You have family in Australia.

You are a resident and citizen of Australia.

You are not a citizen of any other country.

You relocated to Country Z to work in the 20XX financial year.

You have been a non-resident of Australia since 20XX.

You continued to live and work in Country Z until this year.

You intended to relocate back to Australia later in 20YY.

You retuned to Australia earlier than you originally intended and arrived early 20YY.

You were employed under contract by a Country Z based firm until early 20YY.

You have continued to work for the Country Z firm remotely as a consultant.

You intended to relocate back to Australia later in 20YY.

You leased an apartment and held personal items in Country Z.

You terminated the lease on the apartment in Country Z early 20YY.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

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

Reasons for decision

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 (ITAA 1936) and section 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997). The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. These tests are:

·         the resides test

·         the domicile test

·         the 183 day test

·         the superannuation test.

The primary test for deciding the residency status of an individual is whether the individual resides 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 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'.

Taxation Ruling TR 98/17 Income tax: residency status of individuals entering Australia considers the residency status of individuals entering Australia and states the length of time in Australia is an important factor when considering whether an individual resides here. However, the period of physical presence or length of time in Australia is not, by itself, decisive when determining whether an individual resides here.

Paragraph 16 of TR 98/17 advises that a migrant who comes to Australia intending to reside here permanently is a resident from arrival.

An individuals behaviour over the time spent in Australia needs to reflect a degree of continuity, routine or habit consistent with residing here to be considered a resident under this test.

You advised that:

·         you intended to move to Australia during 20YY

·         you arrived in Australia early 20YY

·         you have not left Australia since your arrival

·         you continued to work for the same employer after relocating to Australia

·         you are working remotely for the same employer as an independent consultant and will continue to do so for the majority of the year

·         you currently live in accommodation owned by one of your parents

·         you will be staying in Australia for an indeterminate amount of time, and

·         you have family connections in Australia.

Based on this information you are an Australian resident for tax purposes as your behaviour while in Australia reflects a degree of continuity, routine or habit that is consistent with residing here.

Conclusion

As you are considered to be a resident of Australia for tax purposes under the resides test, it is not necessary to consider the remaining tests of residency. You are a resident of Australia for tax purposes under section 6-1 of the ITAA 1936 and section 995-1(1) of the ITAA 1997 from the date of your arrival in Australia, early 20YY.