| Disclaimer This edited version has been archived due to the length of time since original publication.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. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1013118164096
Date of advice: 1 November 2016
Ruling
Subject: Residency - Superannuation Test
Question 1
Are you an Australian resident for tax purposes for the period of time you live and work in Country A?
Answer
You are an Australian resident for tax purposes for the period of time you live and work in Country A.
Question 2
How does the Double Tax Agreement (DTA) between Country A and Australia determine how your income will be taxed?
Answer
See detailed reasoning below under Double Tax Agreement (DTA)
This ruling applies for the following period:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
20XX
Relevant facts and circumstances
You are an Australian resident.
You left Australia in 20XX to live in Country A for X years on a temporary resident's visa.
You are a permanent employee of a government organisation. You have permission to work off-base part time whilst living in Country A.
You are a contributing member of the Public Sector Superannuation Scheme (PSS).
Your spouse is working in Country A. You went to Country A to accompany your spouse and family.
You do not intend to reside in Country A permanently.
You are living in a rented property in Country A. You have taken all your household effect to Country A.
You own a house in Australia however you intend to sell your house whilst in Country A.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5.
Detailed reasoning
The definition of resident provides four tests for determining whether an individual is a resident for taxation purposes. These tests are:
● residence according to ordinary concepts;
● the domicile and permanent place of abode test
● the 183 day test; and
● the Commonwealth superannuation fund test.
Taxation Ruling TR 98/17 provides further guidance on the four tests.
Residency
The primary test for determining your residency is whether you reside in Australia according to the ordinary meaning of the word.
It is clear that from the meaning of the word to reside in a place you need to be present in that place. You have not been living in Australia since 20XX. As you were not present in Australia we need to consider one of the other tests.
The Commonwealth superannuation fund test
This test covers Commonwealth government employees - members of the Commonwealth superannuation funds (as well as their spouses and children under 16 years of age).
A person is a 'resident' under this test if they are:
● a member of the superannuation scheme established by deed under the Superannuation Act 1990 (SA 1990); or
● an eligible employee for the purposes of the SA 1976; or
● the spouse, or a child under 16, of a person covered by either of the above.
You are an Australian Government employee and a contributing member of Public Sector Superannuation Scheme (PSS). You are an Australian resident if you are a member of the superannuation scheme established under the Superannuation Act 1990 (SA 1990). The PSS scheme was established under this act. You are therefore an Australian resident under this test.
As you are an Australian resident under this test, your spouse and any children under the age of 16 would also be regarded as Australian residents for tax purposes.
Double Tax Agreement (DTA)
Paragraph 64 to 66 of TR 98/17 explains the way DTA's operate.
Australia has a foreign tax credit system and certain exemptions to provide relief from double taxation. Australia has also entered into agreements with a number of countries that avoid double taxation by allocating the taxing rights over bilateral income flows between the respective treaty partners. The double tax agreements generally prevail over the domestic law in the case of any inconsistency.
In most cases, an individual who is a resident of one of the countries for purposes of its domestic law is also a resident of that country for purposes of a double tax agreement.
Australia has a DTA with Country A. The different articles of the Country A DTA determine taxing rights of Australia and Country A in regards to various kinds of income. The residency of the individual and the source of income are the determining factors to see which country has the taxing rights over that income.
Article 19 of the DTA states that remuneration paid by one of the states, in your case Australia, to any individual in respect of services rendered in the discharge of governmental functions shall only be taxable in that state. Hence your salary from the government organization is only taxable in Australia. As you are a resident of Australia you are eligible for the tax free threshold amount
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
