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Edited version of your written advice
Authorisation Number: 1051203690825
Date of advice: 17 March 2017
Ruling
Subject: Residency
Questions and answers:
1. Are you a resident of Australia for income tax purposes from X 20XX?
Yes.
2. Did you acquire your employer share plan units at their market value on X 20XX?
Yes.
This ruling applies for the following period:
Year ended 30 June 20YY
The scheme commenced on:
20XX
Relevant facts and circumstances:
You have moved from Country Y to Australia to live.
You were granted permanent residency of Australia on D 20XX along with your spouse.
Your spouse moved to Australia prior to you and has remained a permanent resident since.
You first entered Australia on E 20XX to activate your permanent residency and to have a two week holiday with your spouse.
You went back to country Y on F 20XX and lived in your home and continued work for your employer.
Your home in Country Y has been rented out.
You entered Australia on X 20XX to commence living here.
You were still employed in Country Y until just after X 20XX at which point you received a final salary from your Country Y employer.
Your final salary statement included the pre-sale price of your employer share plan units.
Your share plan units were sold on after X 20XX.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Subsection 995-1(1)
Income Tax Assessment Act 855-45
Income Tax Assessment Act 1936 Subsection 6(1)
Reasons for decision
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', in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are:
● the resides test,
● the domicile test,
● the 183 day test, and
● the superannuation test.
If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.
Based on the facts provided, we can conclude that you are a resident of Australia for taxation purposes from X 20XX.
Accordingly you are a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.
Becoming an Australian resident
When you become an Australian resident, other than a temporary resident, there is a rule relevant to CGT assets that you owned before you became an Australian resident. Under this rule, you are taken to have acquired the assets at the time you became a resident, for their market value at that time. This rule does not apply to assets that are:
● taxable Australian property; or
● an asset that you acquired before 20 September 1985.
Taxable Australian property includes:
● a direct interest in real property situated in Australia or a mining, prospecting or quarrying right to minerals, petroleum and quarry materials situated in Australia
● a CGT asset that you have used at any time in carrying on a business through a permanent establishment in Australia
● an indirect Australian real property interest - which is an interest in an entity, including a foreign entity, where you and your associates hold 10% or more of the entity and the value of your interest is principally attributable to Australian real property.
In your case you came to Australia to live permanently on X 20XX. You had employer share plan units which you acquired prior to moving to Australia.
As your employer share plan units do not meet any of the conditions listed above for taxable Australian property, and were not acquired before 20 September 1985, you will be viewed as having acquired your employer share plan units on the date you became an Australian resident, for the market value of the shares on X 20XX.
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