Robyn Rainer worked as a lecturer with Victoria University in the college of business. The college of business ran a number of courses in Calcutta University, India. An employee of Victoria University...

PART A
It is a complicated task to understand the issue of residency. There is no strict mark to identify a
esident and moreover is on each individual's circumstances. The issue is of extreme importance
and even a small mistake in determination of residency status can lead to costly consequences.
For determination of the tax liability in Australia on the income that is earned by an individual or
a company the most important factor to be considered is if that person is an Australian or foreign
esident for tax purposes. The Australian tax laws do not use the same criteria as is used by
Department of Immigration and Border Protection for determining the residency for tax
purposes. This makes the following things significant:
 A person can be a resident for tax purposes even without being a citizen of Australia or a
permanent resident
 A person may not be a resident of Australia even if he has an Australian VISA.
There are some tests that need to be done so as to determine the residency status of a person for
Australian tax purposes:
 The domicile test: One is an Australian resident if his domicile i.e., unless the
Commissioner is satisfied that the person's permanent place of abode is outside
Australia. A person is said to be domicile in Australia if he intends to keep in permanent
home indefinitely in Australia under the Domicile Act 1982. This test has been discussed
in Taxation Ruling IT 2650. Unless a person migrates to another country and adopts the
“domicile of his choice”, the country in which he is born is said to be his domicile.
 The 183-day test: If a person is actually present in Australia for more than half the
income year, whether continuously or with
eaks, he may be said to have a constructive
esidence in Australia.
 Resides test: The essence of this test is that whether a person resides in Australia should
e a question of fact that would be decisive based on the circumstances of each case. The
factors to be considered for determining the residency in each case can be as under:
o The extent of the level of ties related to business or family that a person has in his
country of origin and in Australia.
o The reason of absence from Australia for the purpose of business is not merely
enough to state that a person is non-resident of Australia for the purpose of tax.
o The frequency and duration of the return of a person to the country of origin can
also be decisive factors.
o The employment of person outside Australia.
o The extent to which the personal assets and bank accounts are kept in Australia or
the country of origin by the person.
Further the term 'resides' is not defined within income tax legislation, the courts and the
ATO rely on the normal definition of this term while deciding about who is an Australian
esident for income tax purposes.
The Shorter Oxford Dictionary defines reside 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...'
 The Superannuation Test
The persons working for the Australian government overseas may be covered under this test. A
person who may not ordinarily be seemed to be a resident but he can be deemed to be the
esident of Australia if he is an eligible employee for the purpose of the Superannuation Act
1976.
The word “Permanent” takes a significant place in determination of tax liability of a person by
considering the impact of his residency.
1
The courts have rejected the claim that the permanency
has to be interpreted literally. Rather the courts have stated that the term permanent should be
construed with the intention held. If the permanent does not mean it has to be “everlasting” and
forever. Rather it should be contrasted with something that is for “time being” or “temporary”.
2

This way a person having permanent intention to stay away from Australia has negligible terms
associated in Australia can be taken not to be a permanent resident. But as person who has
shifted his place of residence for some purpose that is temporary even when the duration for
which he would...