Edited version of private advice

Authorisation Number: 1051778400731

Date of advice: 16 November 2020

Ruling

Subject: Residency

Question

Are you a resident of Australia for taxation purposes?

Answer

Yes

This ruling applies for the following periods:

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 were born in country X.

You are a citizen of country X.

You hold a country X passport.

Prior to arriving in Australia, you lived in country Y studying master's degree. You were also working as part of the training program in country Y.

You arrived in Australia in 20yy on a short-term visa to work for an employer as a professional.

You have maintained your employment with your employer since arriving in Australia and have recently had your second visa issued for a further 12 months.

The opportunity for you to remain employed with your employer is ongoing and secure.

You chose to seek employment in Australia due to the availability of work in your area of expertise, to enjoy work/life balance in Australia and the possibility of securing a future in Australia long term.

You brought all your personal belongings with you when you arrived in Australia.

Due to COVID-19 and global uncertainty, you are unsure if you will seek permanent residency upon completion of 3 years of employment with your employer.

You have departed Australia since your arrival on 3 occasions:

•         to travel to the country Y to sit exams to become a professional

•         to travel to country X and country Z to be married and honeymoon

•         to travel to country W to visit a friend.

You have not been employed overseas since arriving in Australia.

You have not received any income from outside Australia since arriving in Australia.

You have not been required to lodge an income tax return in any country other than Australia since arriving in Australia.

You have been living at the same address since arriving in Australia.

The home is rented accommodation. You wish to continue to reside at this address for as long as you can.

You live in Australia with your spouse, who arrived in Australia in 20yy.

You are a member of the Australian Professional Organisation and you also hold an Australian professional licence.

You maintain your membership with the American Professional Organisation.

You have established friendships in the local area.

You hold a membership at a local gym.

You do not maintain any home overseas.

You received all your postal mail to your Australian address.

You have maintained an Australian bank account since arriving in Australia.

The only overseas assets held by you is a bank account.

In Australia your assets include your bank account, superannuation and a car.

You hold an Australian private health insurance policy.

You lodged country Y tax returns for the periods you were working there.

You are not a citizen and you are not considered a tax resident of country Y.

You and your husband are not eligible employees in the Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation Scheme (PSS).

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1997 Section 995-1

Reasons for decision

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for taxation 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

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' 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.

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 discusses the Commissioners view on the application of the 'resides' test when determining an individual's residency status.

As per Taxation Ruling TR 98/17, your behaviour whilst you are staying within Australia is used as an indicator as to your status of resident for the given period. In your case, you arrived in Australia to live and work. You live in Australia with your spouse; you have gained long term employment, entered a rental agreement and established friendships in the local area.

Given your circumstances as a whole it is accepted that you are a resident of Australia for taxation purposes from your arrival date.