Edited version of private advice

Authorisation Number: 1051784703856

Date of advice: 20 January 2021

Ruling

Subject: Residency

Question

Are you a resident of Australia for income tax purposes?

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

General

You were born in a country outside Australia.

You lived in that country before coming to Australia.

You arrived in Australia in the 20XX financial year (FY).

You arrived in Australia on a Temporary 417 Working Holiday Visa.

You have previously entered Australia in the 20XX FY also on a Temporary 417 Working Holiday Visa.

You left Australia early in the 20XX FY.

You have an intention to apply for a third Temporary 417 Visa when Australia lifts its international borders when the COVID-19 pandemic is under control.

During or after the period of the third 417 Visa you intend to apply for permanent residency in Australia.

Family and social connections

Your parents live in your country of birth.

You do not have a partner.

You do not have any dependants.

You have a sibling in Australia who is also on a 417 Visa.

Accommodation and assets

You do not own any properties overseas.

Your only assets you have overseas is a motorbike valued at less than $AXX and a foreign bank account with a balance of less than $AXX.

You live in a jointly rented house with friends, on a six-monthly renewable lease, while here in Australia.

Your only assets here in Australia are your car valued at over $AXX and three Westpac bank accounts with a total balance of more than $AXXX.

Your car was stored at a friend's house while you were away from Australia during some of the 20XXFY.

Your sibling has full use of your car while you are out of the country.

Income and employment

You do not receive any income from sources outside Australia.

You do not have any overseas employment positions or jobs being held open for you.

You were employed on a full-time permanent basis.

You have never been eligible for Commonwealth employee superannuation.

Relevant legislative provisions

Subsection 995-1(1) of the Income Tax Assessment Act 1997.

Subsection 6(1) of the Income Tax Assessment Act 1936.

Reasons for decision

Summary

You were a resident for income tax purposes for the 20XX financial year

Detailed reasoning

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.

An individual need only satisfy the conditions of one of the four tests to be deemed a resident of Australia for income tax purposes.

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'.

The Courts and the Tribunal have generally taken into account the following eight factors in considering whether an individual is an Australian resident according to ordinary concepts in an income year:

•         physical presence in Australia;

•         nationality;

•         history of residence and movements;

•         habits and 'mode of life'

•         frequency, regularity and duration of visits to Australia;

•         purpose of visits to or absences from Australia;

•         family and business ties with Australia compare to the foreign country concerned; and

•         maintenance of a place of abode.

The weight to be given to each factor will vary with the individual circumstances and no single factor is necessarily decisive.

Physical presence in Australia

Taxation Ruling TR 1998/17 Income tax: residency status of individuals entering Australia considers physical presence or length of time by itself is not determinative of residency. An individual's behaviour as reflected by a degree of continuity, routine or habit that is consistent with residing in Australia is relevant.

The 417 visa is a Working Holiday Visa designed for people who do not intend to stay in Australia but intend to have a holiday while working some of the time. This allowed you to stay in Australia for the time in question.

In your case you have resided in Australia for more than six months and while this is evidence of residency other evidence need to be considered before residency can be established.

Nationality

You were born in another country and have family remaining in that country. You are currently not a permanent resident or citizen of Australia but intend to apply to become a permanent resident once you return to Australia.

History of residence and movements

You have resided at only the one address while in Australia, worked for only the one employer and only went on a holiday in another country for one week, all of which are an indication that you have had a settled way of life while here in Australia.

Family ties with Australia

You have a sibling who is currently in Australia. Your other family members (your parents) remain in your country of birth.

Maintenance of a place of abode

To be an Australian resident you must demonstrate that your living and working arrangements are consistent with making Australia your home and show that you are not simply in Australia as a visitor or a tourist but are living and working here with a settled way of life.

On the information you have provided you have demonstrated that your living and working arrangements demonstrate that you have been residing in Australia as a resident. As well as having lived in Australia greater than six months you have stated an intention to apply for permanent residency while here on your third and final 417 visa or upon the expiry of that visa thereof. This information can be considered as evidence that you are intending to make your stay more permanent.

You do meet the resides test as you have shown genuine indication that you plan to live here permanently by your activities here in Australia and that your current intention to do so also indicates you residing here in Australia under ordinary concepts.

The domicile test.

Generally speaking, persons entering Australia temporarily would be considered to have maintained their foreign domicile unless it is established that they have acquired a different domicile of choice or by operation of law. In order to show that a new domicile of choice in Australia has been adopted, the person must be able to prove an intention to make his or her home indefinitely in Australia e.g., through having obtained a migration visa. This test is more applicable for when individuals leave Australia either to migrate or to work overseas.

In your case, for the period in which this ruling relates, your domicile is considered to be your country of birth as you have not taken active steps to change your domicile to Australia through steps such as becoming an Australian citizen. Therefore you are not a resident under this test.

The 183 day test

The Commissioner considers that this test is meant to apply to visitors and migrants, rather than to Australians who are leaving the country. It is a test of physical presence in which a person must be in Australia for more than half the income year (183 days).

In your case you were here for more then 183 days in the period in question and are therefore a tax resident because you meet the requirements of the 183 day test.

The superannuation test

An individual is considered to be a resident if that person is eligible to contribute to the PSS or the CSS, or that person is the spouse or child under 16 of such a person. To be eligible to contribute to those schemes, you must be or have been a Commonwealth Government employee.

You are not eligible to contribute to the relevant Commonwealth superannuation funds. You will not be treated as a resident under this test.

Your residency status

As you meet two of the tests, you are an Australia resident for income tax purposes for the 20XX income year.