1 Are you a tax resident of Australia pursuant to subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) from the date of your arrival in Australia?
No. Question 2 Are you a temporary resident of Australia pursuant to section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? Answer Yes. Question 3 Is your employment income from your Australian employer assessable in Australia under article 14 of the double tax agreement (DTA) between Australia and Country A? Answer Yes. This ruling applies for the following period : Year ended 30 June 20XX The scheme commenced on: XX XXXX 20XX
You were born in Country A. You are only a citizen of Country A. You do not have a spouse or dependants. You have social connections in Country A. You own your car in Country A, which is currently listed for sale. Before XX XXXX 20XX, you rented a room at Property A in Country A. Property A is still always available to you. You pay a lesser amount of rent to continue to use the room to store your belongings and stay in when you are in Country A. On XX XXXX 20XX, you travelled to Australia on a special category visa (subclass 444). This temporary visa allows you to visit, study, stay, and work in Australia, if you are a Country A citizen and meet the eligibility criteria. From XX XXXX 20XX, you commenced employment with Employer A. You work as an engineer. You are a 'fly in fly out' (FIFO) worker. You are required to work at multiple different locations and do not have a set location where you perform your services. However, all services are performed in Australia. You are currently contracted to the end of the Project A, which will be roughly XX years. Your employment can be extended, if the project deadline is extended or additional work is allocated to complete the project.
Your employment may also be extended with Employer A, if they offer you a role in another project once Project A finishes. On XX XXXX 20XX, you returned to Country A. On XX XXXX 20XX, you travelled to Australia. On XX XXXX 20XX, you returned to Country A. On XX XXXX 20XX, you travelled to Australia. On XX XXXX 20XX, you returned to Country A. On XX XXXX 20XX, you travelled to Australia. On XX XXXX 20XX, you returned to Country A. On XX XXXX 20XX, you travelled to Australia. On XX XXXX 20XX, you will return to Country A. Going forward your travel arrangements between Australia and Country A for work will be: • XX travel day to Australia followed by XX working days. • XX travel day to Country A followed by XX rest days. Whilst in Australia for work you have been staying at motel-like accommodations. Your employer usually books your Australian accommodation. If you book your Australian accommodation, your employer reimburses you. You have not applied for citizenship or permanent residency in Australia. Besides your employment and gym membership, you have no other professional or social connections in Australia. In Australia, you do not:
• have an Australia driver's license but may get one in the future. • have private health insurance. • own any assets. You do not receive other income from outside of Australia and Country A. You have an Australian superannuation account. You are not a member of superannuation scheme A which was established under the Superannuation Act 1990. You are not an eligible employee in respect of superannuation scheme B which was established under the Superannuation Act 1976.
Income Tax Assessment Act 1936 subsection 6(1) Income Tax Assessment Act 1997 section 995-1 Income Tax Assessment Act 1997 section 6-5 Income Tax Assessment Act 1997 section 6-20 Income Tax Assessment Act 1997 subdivision 768-R Income Tax Assessment Act 1997 section 995-1 International Tax Agreements Act 1953
Question 1 Summary As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes for the year ended 30 June 20XX. 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', as applied 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 resides test (also referred to as the ordinary concepts test) • the domicile test • the 183-day test, and • the Commonwealth superannuation fund test. The resides test is the primary test for deciding the residency status of an individual. This test considers whether an individual resides in Australia according to the ordinary meaning of the word 'resides'.
Where an individual does not reside in Australia according to ordinary concepts, they will still be an Australian resident if they meet the conditions of one of the other tests (the domicile test, 183-day test and Commonwealth superannuation fund test). Our interpretation of the law in respect of residency is set out in Taxation Ruling TR 2023/1 Income tax: residency tests for individuals . We have considered the statutory tests listed above in relation to your situation as follows: The resides test The ordinary meaning of the word 'reside' has been expressed as 'to dwell permanently or for a considerable time, to have one's settled or usual abode, to live, in or at a particular place': See Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99 per Latham CJ, citing Viscount Cave LC in Levene v Inland Revenue Commissioners [1928] AC 217 at 222, citing the Oxford English Dictionary. Likewise, the Macquarie Dictionary defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'. The observations contained in the case of Hafza v Director-General of Social Security (1985) 6 FCR 444 are also important:
Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place - even involuntarily: see Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 248; and Keil v Keil [1947] VLR 383 - a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place - Levene v Inland Revenue Commissioners [1928] AC 217 at 225 and Judd v Judd (1957) 75 WN (NSW) 147 at 149 - together with an intention to return to that place and an attitude that that place remains "home": see Norman v Norman (No 3) (1969) 16 FLR 231 at 235... here the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as "home", a change of intention may be decisive of the question whether residence in a particular place has been maintained. The Commissioner considers the following factors in relation to whether a taxpayer is a resident under the 'resides' test:
• period of physical presence in Australia • intention or purpose of presence • behaviour while in Australia • family and business/employment ties • maintenance and location of assets • social and living arrangements. It is important to note that no one single factor is decisive, and the weight given to each factor depends on each individual's circumstances. Because the resides test is about whether an individual resides in Australia, the factors focus on the individual's connection to Australia. Having a connection with another country, or being a resident of another country, does not diminish any connection to Australia. The ordinary meaning of reside does not require an individual to have a principle or usual place of residence in Australia. Application to your situation You are not a resident of Australia under the resides test for the period from XX XXXX 20XX to XX XXXX 20XX based on the following: • period of physical presence in Australia - From XX XXXX 20XX, you travelled to Australia as a FIFO worker. - When you are not working you return to Country A. • intention or purpose of presence - You have stated you intend to purchase a property in the future in Australia.
• behaviour while in Australia - You perform your employment duties in Australia. - You travel Australia. - You usually return to Country A when you are not working. • family and business/employment ties - Your family resides in Country A. - You are employed by an Australian employer and perform your services within Australia. - Your employment can be extended, if the project deadline is extended or additional work is allocated to complete the project. • maintenance and location of assets - You do not own assets in Australia besides a bank account. • social and living arrangements. - You stay in temporary accommodation in Australia. You may still be an Australian resident if you meet the conditions of one of the other tests (the domicile test, 183-day test and Commonwealth superannuation fund test). Domicile test Under the domicile test, you are a resident of Australia if your domicile is in Australia unless the Commissioner is satisfied that your permanent place of abode is outside Australia. Domicile Whether your domicile is in Australia is determined by the Domicile Act 1982 and the common law rules on domicile.
Your domicile is your domicile of origin (usually the domicile of your father at the time of your birth) unless you have a domicile of dependence or have acquired a domicile of choice elsewhere. To acquire a domicile of choice of a particular country you must be lawfully present there and hold the positive intention to make that country your home indefinitely. Your domicile continues until you acquire a different domicile. Whether your domicile has changed depends on an objective consideration of all relevant facts. Application to your situation In your case, you were born in Country A and your domicile of origin is Country A. From XX XXXX 20XX, you travelled to Australia as a FIFO worker. You are currently not an Australian citizen. It is considered that you did not abandon your domicile of origin in Country A and acquire a domicile of choice in Australia. You are entitled to reside in Australia indefinitely because you hold a special category visa (subclass 444). Therefore, your domicile is Country A, and you are not a resident of Australia under the domicile test. 183-day test
Where a person is present in Australia for 183 days or more during the year of income the person will be a resident, unless the Commissioner is satisfied that both: • the person's usual place of abode is outside Australia, and • the person does not intend to take up residence in Australia. Application to your situation You have not been present in Australia for 183 days or more during the income year ended 30 June 20XX. Therefore, you are not a resident under this test. Usual place of abode In the context of the 183-day test, a person's usual place of abode is the place they usually live, and can include a dwelling or a country. A person can have only one usual place of abode under the 183-day test. However, it is also possible that a person does not have a usual place of abode. This is the case for a person who merely travels through various countries without developing any strong connections.
If a person has places of abode both inside and outside Australia, then a comparison may need to be made to determine which is their usual place of abode. When comparing two places of abode of a particular person, we will examine the nature and quality of the use which the person makes of each particular place of abode. It may then be possible to determine which is the usual one, as distinct from the other or others which, while they may be places of abode, are not properly characterised as the person's usual place of abode: Emmett J at [78] in Federal Commissioner of Taxation v Executors of the Estate of Subrahmanyam [2001] FCA 1836. Application to your situation The Commissioner is satisfied that your usual place of abode was outside Australia for the relevant income year based on the following: • You do not have an established place of abode in Australia. Every time you travel to Australia for work, your employer or you books accommodation for that period. Intention to take up residency
To determine whether you intend to take up residence in Australia, we look at evidence of relevant objective facts. 'Intend to take up residency' does not merely mean intend to stay for a long time. It means intending to live here in such a manner that you would reside here. Application to your situation The Commissioner is not satisfied that you did intend to take up residence in Australia for the relevant income year because: • You work as a FIFO worker. • You do not have permanent accommodation in Australia. • You return to Country A when you are not working. Superannuation test An individual is a resident of Australia if they are either a member of the superannuation scheme established by deed under the Superannuation Act 1990 or an eligible employee for the purposes of the Superannuation Act 1976, or they are the spouse, or the child under 16, of such a person. Application to your situation You are not a member on behalf of whom contributions are being made to the superannuation scheme A or the superannuation scheme B or a spouse of such a person, or a child under 16 of such a person. Therefore, you are not a resident under this test. Conclusion
As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes for the year ended 30 June 20XX. Question 2 Summary You are a temporary resident as defined in section 995-1 of the ITAA 1997 from the date of your arrivals until you are granted a permanent resident visa or Australian citizenship. Your temporary resident status and the temporary resident rules ceased to apply to you at this time. Detailed reasoning Section 995-1 of the ITAA 1997 states that you are a temporary resident if: • you hold a temporary visa granted under the Migration Act 1958 ; • you are not an Australian resident within the meaning of the Social Security Act 1991 ; and • your spouse is not an Australian resident within the meaning of the Social Security Act 1991 . Under the Social Security Act 1991 , an Australian resident is generally a person who resides in Australia and is either an Australian citizen or the holder of a permanent resident visa. In your cases, from the date of your arrival in Australia, you were not an Australian resident within the meaning of the Social Security Act 1991
as you were not an Australian citizen, the holder of a permanent visa or a protected special category visa holder. As such, you are a temporary resident as defined in section 995-1 of the ITAA 1997 from the date of your arrivals until you are granted a permanent resident visa or Australian citizenship. Your temporary resident status and the temporary resident rules ceased to apply to you at this time. Subdivision 768-R of the ITAA 1997 provides that where you are a resident of Australia for taxation purposes and also meet the requirements to be a temporary resident of Australia you will be subject to the following temporary resident rules: • Any income you earn from an overseas source will not be taxed in Australia except income earned from employment performed overseas for short periods while you are a temporary resident. • Any capital gain you make from a capital gains tax event that relates to an asset that is not taxable Australian property will not be taxed in Australia. • Special rules apply to capital gains on shares and rights acquired under employee share schemes. Question 3 Summary
You are employed by an Australian employer and perform your employment services exclusively in Australia. Therefore, the remuneration you receive from this employer is taxable in Australia. Detailed reasoning Subsection 6-5(3) of the ITAA 1997 provides that the assessable income of a foreign resident taxpayer includes ordinary income that is sourced directly or indirectly from all Australian sources during the income year. Subsection 6-10(5) of the ITAA 1997 provides that assessable income of a foreign resident taxpayer includes statutory income from all Australian sources. Employment income is ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997. Subsection 6-20(2) of the ITAA 1997 provides that ordinary income is exempt to the extent that 'this Act' excludes it from being assessable income. 'This Act' is defined to include the ITAA 1936. Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the ITAA 1936 and the ITAA 1997 so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations).
Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreement. Taxation Ruling TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreements discusses the Commissioner's views about interpreting double tax agreements. Paragraph 104 of TR 2001/13 provides that the OECD Model Tax Convention and Commentary will often need to be considered in interpreting double tax agreements. Under double tax agreement between Australia and Country A. Article XX deals with Income from employment and states: 1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2.
Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the year of income of that other State, and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, or is borne by or deductible in determining the profits attributable to a permanent establishment which the employer has in the first-mentioned State, and (c) the remuneration is neither borne by nor deductible in determining the profits attributableto a permanent establishment which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised aboard a ship or aircraft operated in international traffic shall be taxable only in that State. 4.
Notwithstanding the preceding provisions of this Article, remuneration derived by an individual who is a resident of a Contracting State in respect of a secondment to the other Contracting State shall be taxable only in the first-mentioned State where the individual is present in the other State for a period or periods not exceeding in the aggregate 90 days in any twelve month period. Application to your circumstances You are employed by an Australian employer and perform your employment services exclusively in Australia. Therefore, the remuneration you receive from this employer is taxable in Australia.