Residency Test PDF

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Summary

Residency Tests as per Australian Taxation Law...

Description

ATO and court uses the ‘resides test’ as primary test of tax residency. As per TR 98/17 (11), “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'”. The word “reside” is referred generally in the act 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”. Under the definition, ATO and court normally assesses the intention and character of an individual's behaviour while in Australia to assist in determining whether the individual resides in Australia. No single factor necessarily determines residency and many factors are interrelated. As per TR 98/17 (17) “When an individual arrives in Australia not intending to reside here permanently, all the facts about his or her presence must be considered in determining residency status” & the period of physical presence is not the pivotal factor for judging residency. As per TR 98/17 (20), the quality and character of an individual's behaviour while in Australia assist in determining whether the individual resides in Australia. Following factors are useful in describing the quality and character of an individual's behaviour: 

intention or purpose of presence;

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family and business/employment ties;

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maintenance and location of assets; and

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social and living arrangements

As per TR 98/17 (20), “ All the facts and circumstances that describe an individual's behaviour in Australia are relevant”. Factors such and intention of presence, family and business ties, maintenance of assets and social and living arrangements describe the quality and character of individual’s behaviour that helps in identifying whether the individual resides in Australia. All the facts and circumstances that describe an individual's behaviour in Australia are relevant. In particular, the following factors are useful in describing the quality and character of an individual's behaviour:  intention or purpose of presence;  family and business/employment ties;

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maintenance and location of assets; and 

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social and living arrangements.

In addition to the ‘resides’ test, an individual is still considered an Australian resident if one of three of the following secondary statutory tests is satisfied, if the primary ‘resides’ test is unsatisfied. 

the domicile and permanent place of abode test;

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the 183 day test; and

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the Commonwealth superannuation fund test.

The domicile test: The main purpose of this test is to assess the main domicile place (broadly, the place that is individual’s permanent home). An individual is an Australian resident if his domicile is satisfied to be outside Australia. The 183-day test: If an individual actually present in Australia for more than half the income year, whether continuously or with breaks, he/she may be said to have a constructive residence in Australia, unless it can be established that his/her usual place of abode is outside Australia and he/she have no intention of taking up residence here. The superannuation test: This test ensures that Australian government employees working at Australian posts overseas are treated as Australian residents....