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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012277267679

Ruling

Subject: Residency for tax purposes

Question:

Are you a resident of Australia for the purposes of the tie breaker provision of the double Taxation Agreement between Australia and Country Y?

Answer:

Yes.

This ruling applies for the following period:

Year ending 30 June 2013

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

The scheme commenced on:

1 July 2012

Relevant facts and circumstances

You are a resident for taxation purposes in both Australia and Country Y.

You are a citizen of both Australia and Country Y.

You live with your partner in both Australia and Country Y.

You have a home in Australia which you and your partner share.

You live in Australia for half of the year.

You will be in Country Y for half the year.

Your partner will live with you in Australia.

Your partner has a home in Country Y which you both live in when you are in Country Y.

You have the following personal and economic relations in Australia:

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 6-5.

International Tax Agreements Act 1953 Sch4-Art19.

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a non-resident of Australia for taxation purposes, your assessable income includes only income from an Australian source.

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 agreements.

Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (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. The Country Y Agreement is listed in section 5 of the Agreements Act.

The Country Y agreement is located on the Austlii website (www.austlii.edu.au) in the Australian Treaties Series database. The agreement operates to avoid the double taxation of income received by residents of Australia and Country Y.

In your case, you are a resident of both Australia and Country Y for tax purposes, according to each country's domestic law.

Paragraph 3 of Article X of the double tax agreement sets out the factors to be considered when determining a person's residence for the purpose of the agreement, where the person is a resident of both Australia and Country Y under domestic law:

The status of an individual who, by reason of the preceding provisions of this Article is a resident of both Contracting States, shall be determined as follows:

You have a permanent home available to you in both Australia and Country Y. Therefore, we need to consider which country your personal and economic relations are closer.

You have the following personal and economic relations in Australia:

In considering your personal and economic relations to both Australia and Country Y as listed above, the facts of your situation show that you have stronger ties to Australia because you live in Australia with your partner for half of each year, you have family in Australia and significant assets in Australia.

As your personal and economic relations are stronger in Australia than in Country y, therefore for the purposes of the double tax agreement you are a resident of Australia.

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