Edited version of your written advice

Authorisation Number: 1051262133110

Date of advice: 10 August 2017

Ruling

Subject: Trust income – overseas – becoming resident

Question 1

Will you be deemed to be resident only in Country X (for the purposes of the DTA between Australia and Country X) for the 201G to 202H calendar years (the relevant X year period) in the circumstances described in this Request for Ruling?

Answer

Yes

Question 2

Will the Transferor Trust provisions (i.e. Division 6AAA ITAA 1936) apply to you in relation to the three Country X Trusts described within the facts namely A Trust; B Trust and C Trust (the Protector trusts)?

Answer

Yes

Question 3

Will you be partly assessable on income of the Protector trusts under the Transferor Trust provisions?

Answer

Yes (to the extent that the income is EDCI)

Question 4

If the D Trust realises a capital gain in respect of assets having no connection to Australia (during the X year period) and distributes that gain to you are you assessable on that gain?

Answer

Yes

Question 5

If you hold the assets for more than 12 months after you become a resident of Australia will you eligible for the CGT discount on any capital gain arising from assets in Country X having no connection to Australia?

Answer

Yes

Question 6

If the D Trust realises a capital gain in respect of shares in Z Inc. (during the relevant X year period), and if that gain is considered to be assessable in Australia is the cost base attributed to those shares for Australian CGT purposes equal to the market value of those shares in Z when the change of residence of that trust occurs?

Answer

Yes.

Question 7

Will "Other Income" provisions of the DTA in Article 21 apply to you if the transferor trust provisions apply to the Protector trusts in respect of income from Country X?

Answer

Yes

Question 8

Does the DTA protect you from assessment of any of the Country X sources interest and dividends derived by the D Trust which is derived by you as trustee and distributed to you as beneficiary during the relevant X year period?

Answer

No

Question 9

Does the DTA protect you from assessment to them of any of the Country X sourced capital gains derived by the D Trust which is derived by them as trustees and distributed to themselves as beneficiaries during the relevant X year period?

Answer

No

Question 10

Would amounts distributed from D Trust to you be exempted under Article 20 of the DTA dealing with students?

Answer

No

This ruling applies for the following periods

Year ended 30 June 2018

Year ended 30 June 2019

Year ended 30 June 2020

Year ended 30 June 2021

The scheme commences on

1 January 2018

Relevant facts and circumstances

General

You and your family (your spouse and your X children) are planning to move to Australia to live for a period of X years commencing in early 201G (the relevant X year period).

You will be enrolled as a student for X years at University undertaking a X year degree.

The main purpose of the move in 201G will be for you to undertake the X year degree.

Prior to leaving Australia in the early 2000's, you undertook Y Masters Degrees in Australia.

You were the subject of a previous private ruling concerning your residential status.

In the 201D to 201F financial years you have been resident in Country X and have lodged tax returns there as well as non-resident tax returns in Australia.

You are likely to visit your home in Country X and family and friends in Country X between early 201G and late 202H. You would also travel to Country X to review investments (attending directors and management meetings). The specific time periods are unknown but are unlikely to be more than 70 days a year. These visits will usually occur during the long university breaks in December/January and June/July. However, you may need to travel to Country X for business at other times. There is also the possibility of travelling to other countries during the holiday periods.

You and your spouse have never been Commonwealth Government of Australia employees.

You are over 16 years of age.

You and your spouse's intentions are to return permanently to Country X once you complete your degree. You will return to the residence maintained in Country X throughout this period.

You and your spouse have been in Australia during the period 201F examining courses and speaking to Educators about the course to be undertaken.

You will continue to be a resident of Country X for taxation purposes.

You will be a resident of Australia for taxation purposes whilst you are studying in Australia.

Family and Social

You and your spouse have no intention to reside in Australia permanently.

Both you and your spouse are citizens of Country X. You are also a citizen of Australia. Your children are dual citizens of Country X and Australia.

Your spouse will enter Australia on a visitor’s visa which will require them to depart Australia every three months for renewal of their visa. Your spouse has discovered that they may extend their visitor visa to six months without leaving the country. If your spouse needs to leave the country to renew their visitor visa it is likely that they will take the children with them.

From 200A until 201E you home schooled your children. Since 201E your children have been enrolled at a school in Country X. Your children will attend a school in the local area in Australia or be schooled by distance education from overseas via video.

You are a member of several professional organisations in Country X.

Accommodation and assets

You, through an Australian trust, own a unit in Australia which you purchased in 200B. You do not intend to reside in this property while in Australia.

From early 201C you and your spouse have been residing in Country X.

You and your spouse will retain your existing residence in Country X, which you own, keep it available for your use during the X years (i.e. not rent it out) and return to it at the end of the X years. The house is fully furnished and the majority of your personal effects will be left there. A vehicle will also be left at the home.

You and your spouse will rent a home in Australia during the period of X years for personal use and for you, your spouse and children.

You do not intend to purchase of a permanent residence in Australia, although some furniture and appliances may be purchased.

Income and employment

You will not be employed in Australia, nor attempt to establish any business activity in Australia.

You were employed as an Executive of Country X Corporation from 201I until 201D. You made a very healthy profit on the sale of that Corporation.

You are and have been a director and senior executive of several corporations in Country X from 201D to now.

Trusts

Investment income will be derived by two Country X Trusts established in 201C (B Trust and C Trust) and a Country X Trust established in 201J (A Trust). The B Trust, the C Trust and the A Trust (the Protector trusts) are, for Country X tax purposes, protector trusts, so that tax is paid separately by the trustee of the trust (indirectly by you and your spouse). Under Country X tax rules these trusts become foreign trusts if the beneficiaries become non Country X tax residents, and the taxing point will change. By the terms of the trust deeds, you and your spouse are the appointors of the Protector trusts, and retain the power to remove the trustee. Investment income will be generated mostly from Country X sources, and mostly in the form of dividends (mostly from listed entities) and interest. A Trust also holds shares in Z Inc. It is also expected that some capital gains will be realised by the A Trust from shares in Country X Companies including Z Inc.

The Trustee of each of the Protector trusts is a citizen of and resident of Country X and they will continue to be resident only in Country X during the relevant X year period. The Trustee will manage the day to day running of the trusts and will only consult you when you are in Country X or outside Australia. Whilst it is not uncommon for the trustee to liaise with you and your spouse regarding investment decisions that are made in respect of the Trust Funds, the needs for portfolio management are of a kind that it would be possible and expected for you and the trustee to consult on these matters largely when you are present in Country X overseeing business.

Also by the terms of the Trust Deed, the trustee has the power to accumulate income.

The trustee of the Protector trusts will accumulate income in the Protector trusts in the relevant income years.

You and your spouse have gifted substantial sums to each of the Trusts. Each of the Trusts is a discretionary trust, principally and only for the benefit of your children. The trusts will derive no income with an Australian source and will hold no taxable Australian assets. The companies in which shares are held by the Trusts will generally be incorporated in Country X or listed on a Country X stock exchange.

You have a power to remove and appoint the Trustee of B Trust. Your spouse has a power to remove and appoint the Trustee of the C Trust. You and your spouse have powers to remove and appoint the Trustee of the A Trust.

D Trust

A fourth Trust called the D Trust was established in early 200K.

Investment Income will also be derived by D Trust. You and your spouse are beneficiaries of D Trust and are also its Trustees. You and your spouse have also transferred assets to this Trust. For Country X purposes this Trust is treated as a grantor trust and (for Country X tax purposes) its income is assessed to you and your spouse. D Trust will distribute income to you and your spouse during the relevant X year period. During your joint lives you and your spouse are entitled to all income and principal of D Trust.

D Trust holds stocks, bonds, alternative investments (hedge funds and Private Equity that report on private equity firms), as well as accounts in another overseas country that hold stocks and bonds. D Trust holds shares in Z Inc and two other Country X corporations. Income is generated through dividends and interest (a combination of Country X and foreign taxable and Country X federal tax free), realised capital gains, and income reported on private equity tax statements in the case of the alternatives. Some of the income of D Trust is derived from investments in Managed Trusts and hedge funds – some foreign source. That managed trust itself sources income from dividends, interest and capital gains. D Trust will likely not derive any income with an Australian source or any capital gains from assets connected with Australia.

D Trust and A Trust each hold the following shares in Z Inc.:

(a) D Trust – in excess of Z million shares comprising X% of common stock (and X% on a Fully Diluted Basis);

(b) A Trust – about X shares comprising X% of common stock (and X% on a Fully Diluted Basis).

The trusts in Country X have assets in excess of $XXmillion invested.

You and your spouse are presently entitled to any capital gains derived by D Trust as and when it is derived (clause 2 of the Trust Deed). The gains will be held in the trust as unpaid present entitlements for you and your spouse.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1936 section 6B

Income Tax Assessment Act 1936 Division 6

Income Tax Assessment Act 1936 section 95

Income Tax Assessment Act 1936 subsection 95(2)

Income Tax Assessment Act 1936 subsection 95(3)

Income Tax Assessment Act 1936 section 97

Income Tax Assessment Act 1936 section 98

Income Tax Assessment Act 1936 section 99

Income Tax Assessment Act 1936 section 99B

Income Tax Assessment Act 1936 Division 6AAA

Income Tax Assessment Act 1936 section 102AAT

Income Tax Assessment Act 1936 section 102AAZD

Income Tax Assessment Act 1936 section 102AAU

Income Tax Assessment Act 1936 section 102UX

Income Tax Assessment Act 1997 subdivision 115-C

Income Tax Assessment Act 1997 section 770-10

Income Tax Assessment Act 1997 section 855-40

Income Tax Assessment Act 1997 section 770-70

Income Tax Assessment Act 1997 section 770-15

Income Tax Assessment Act 1997 section 855-50

Income Tax Assessment Act 1997 section 770-75

International Tax Agreements Act 1953 section 4

International Tax Agreements Act 1953 section 5

Country X agreement

Reasons for decision

Question 1

Will you and your spouse be deemed to be resident only in Country X (for the purposes of the DTA between Australia and Country X) during the period commencing on early 201G and ending late 202H (the relevant X year period) in the circumstances described in this Request for Ruling?

Summary

You will be a resident of Country X under the tie breaker test in Article 4 of Country X Agreement.

Detailed reasoning

You are an Australian citizen and will be an Australian resident for tax purposes. You are also a Country X citizen and resident for Country X tax purposes. In addition, your spouse is a Country X citizen. Your spouse and children will be living in Australia with you for the duration of your study.

In determining liability to Australian tax of foreign sourced income, it is necessary to consider not only the income tax laws but also any applicable tax treaty referred to in the International Tax Agreements Act 1953 (Agreements Act). These treaties are often referred to as Double Tax Agreements (DTA).

Section 4 of the Agreements Act incorporates that Act with the Income Tax Assessment Act 1936 (ITAA1936) and the Income Tax Assessment Act 1997 (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 X Agreement is listed in section 5 of the Agreements Act.

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

You are not a temporary resident as you are an Australian citizen and do not need to hold a temporary visa granted under the Migration Act 1958.

As you are an Australian resident for income tax purposes and Country X also considers you a resident for tax purposes, it is necessary to consider the tie breaker rules in Country X DTA.

Tie Breaker provisions under DTA

Article 4 of the Country X DTA provides tests of residency that are used where the individual is a resident of the two countries (tie breaker tests). The tie breaker tests ensure that the individual is a resident of one country for the purposes of working out liability to tax on their income. The tie breaker rules do not change a taxpayer’s residency status for domestic law purposes.

Under article 4(2) where an individual is a resident of both Australia and Country X, they shall be deemed to be a resident of the country:

(a) in which they maintain their permanent home;

(b) if (a) does not apply, in which they have an habitual abode if they have their permanent home in both countries or in neither of country; or

(c) if (a) and (b) do not apply, with which their personal and economic relations are closer if they have an habitual abode in both countries or in neither country.

Additionally, for the purposes of this article 4(2), in determining an individual's permanent home, regard shall be given to the place where the individual dwells with his family, and in determining the country with which an individual's personal and economic relations are closer, regard shall be given to their citizenship (if they are a citizen of one of the Contracting States).

You will maintain permanent homes in both Australia and Country X and these will be available to you and your family for the relevant X year period.

Consequently consideration needs to be given to your habitual abode.

In relation to a habitual abode, the OECD Commentary states that all stays in each country, regardless of the purpose of the stays, must be considered in order to assign a preference to a particular country. Further, the comparison must be made over a sufficient length of time for it to be possible to determine whether the presence in each country is habitual and to also determine the intervals at which the stays take place.

The notion of a habitual abode is not simply a test of where a person stays more frequently but also looks to whether living in a particular country is normal or customary having regard to the taxpayer's circumstances. You own a dwelling in Country X that will be available to you at all times. You will also be renting a furnished dwelling in Australia for the duration of your study in Australia. As it will be usual or customary for you and your spouse and children to spend time in both countries whilst you are studying in Australia, you will have a habitual abode in both countries.

Therefore, consideration needs to be given to which country you will have closer personal and economic relations, including your citizenship.

In relation to a taxpayer's personal and economic relations, the OECD Commentary states that regard should be had to factors such as family and social relations, occupation, political, cultural or other activities and place of business.

In your case you have personal ties in both Country X and Australia. You possess assets in Australia including an apartment. You and your spouse have a bank account in Australia. You are a citizen of both Country X and Australia. However, your spouse will be using a visitor visa that will need to be extended at least each six months. Your spouse may need to leave the country to renew their visa. Your children will be living in Australia with you for the duration of your study.

You have economic ties with both Australia and Country X. Your children are the beneficiaries of two Country X trusts (B Trust and C Trust), you contributed X million dollars to these trusts from the sale of a business. You are a director of several companies in Country X. You will travel to Country X several times each year while you are in Australia to attend directors meetings and review these entities’ performance. You have established another company in Country X (Z Inc) and you are a director of that company.

You established the D Trust in Country X. You and your spouse are trustees and beneficiaries of that trust.

However, in the years you are in Australia your economic and family ties will be closer with Country X as

● You have significant financial assets in Country X

● You and your family are Country X citizens

● You own the home that is permanently available to you in Country X

● Your family will return with you to your home in Country X several times a year during university breaks to allow you to attend directors meetings and review your investments

● You will not be earning any income from business or employment in Australia and you will be renting a home in Australia.

On balance your economic ties will be closer to Country X. Consequently under article 4 of the Country X Agreement you will be a resident of Country X.

Questions 2 – 9

Summary

The operation of the Australian 'transferor trust rules’ is attracted for the three Country X Protector trusts. However, as those trusts are resident in a listed country, the operation of the rules is limited in scope so that Australian tax will only apply to amounts of 'eligible designated concession income’ from the Country X Protector trusts attributed to you.

D Trust will start to be a resident trust estate when you and your spouse move to Australia, as at that time you become an Australian resident for Australian tax law. You are from that time a resident beneficiary of a resident trust estate. So, apart from the operation of the Country X Agreement you would include in your assessable income your share of the net income of the trust estate, and your share of capital gains. For working out capital gains or capital losses on any assets of the D Trust held at the time when you move to Australia, your cost base and reduced cost base will be their market value at that time. This will apply to Z Inc shares held by D Trust on trust for you.

This position is modified by the Country X Agreement. Dividend and interest income derived from the Country X investments of the D Trust and the managed trust that it holds investments in will only be assessable to you in Country X (Article 21 of the Country X Agreement (DTA)).

The position is not modified for capital gains. Article 13 reserves the right of Australia to tax capital gains that are derived by D Trust and distributed to you.

Detailed reasoning

Australian tax liability B Trust, the C Trust and A Trust

Subsection 95(2) of the ITAA1936 provides that a trust estate will be resident in Australia if at any time during the year of income either:

a) the trustee of the trust estate is resident of Australia or

b) the central management and control is in Australia.

A trust that is not a resident trust estate is a non-resident trust estate in relation to that year of income (Subsection 95(3) of the ITAA 1936).

The trustee of the B Trust, the C Trust and A Trust (the Protector trusts) will at no time be a resident of Australia. You will predominantly discuss the operation of these trusts when you are present in Country X. Therefore, we are satisfied that the Protector trusts will be non-resident trusts.

As a result there are no Division 6 consequences. As the Protector trusts will accumulate income during the period when you are present in Australia sections 97 and 98 of the ITAA 1936 will not apply to assess income to the beneficiaries. Additionally, the trustee will not be liable to tax in respect of the share of the net income to which no beneficiary is presently entitled as none of the income is attributable to sources in Australia (subsection 99(4) and (5) of the ITAA 1936). Section 99B of the ITAA1936 will not apply to foreign source income as the income will not be distributed to you.

There may be consequences under the 'transferor trust’ rules in Subdivision D of Division 6AAA of the ITAA 1936 will apply to attribute certain income of the Protector trusts to you and your spouse as attributable taxpayers (as described in section 102AAT of the ITAA 1936), as:

(i) You are an 'attributable taxpayer’ as defined in sub-section 102AAT(1) of the ITAA 1936, as you have transferred property to the trusts in circumstances that satisfy paragraph 102AAT(1)(a), and, having originally been a resident of Australia, the further conditions in paragraphs (b) and (c) are not applicable: (102AAZD(1)(a) of the ITAA 1936);

(ii) Your spouse is an 'attributable taxpayer’ as defined in sub-section 102AAT(1) of the ITAA 1936, as they have transferred property to the trusts in circumstances that satisfy paragraph 102AAT(1)(a), and, having originally been a resident of Australia, the further conditions in paragraphs (b) and (c) are not applicable: (102AAZD(1)(a) of the ITAA 1936);

(iii) Each of the income years ended 30 June 201G to 30 June 202M is a 'non-resident year of income’ for the Protector trusts: paragraph 102AAZD(1)(b) of the ITAA 1936 and definitions of 'non-resident trust estate’ (section 102AAB) of the ITAA 1936) and resident trust estate (subsection 95(2) of the ITAA 1936);

(iv) You and your spouse are residents of Australia during those years of income (102AAZD(1)(c) of the ITAA 1936);

(v) There may be 'attributable income’ and hence 'notional attributable income’ of the trust estates for each of the income years. As the Protector trusts satisfy the definition of 'listed country trust estate’ this calculation is worked out on the basis that all income except eligible designated concession income (EDCI) is exempt income (paragraph 102AAU(1)(b) of the ITAA 1936);

(vi) A further rule in paragraph 102AAU(1)(d) of the ITAA 1936, by which attributable income is reduced by the amount of foreign tax or Australian tax paid in respect of the income, would reduce but not exclude potential liability under Division 6AAA) of the ITAA 1936;

(vii) the suspending condition in subsection 102AAZD(3) of the ITAA 1936, about separate transferors, is not relevant to the facts of the arrangement;

(viii) the question whether the suspending condition in subsection 102AAZD(4) of the ITAA 1936 ( about trivial amounts) would apply would depend on the facts in a particular year.

It can be seen from the above that the key turning point is whether any income of the Protector Trusts is EDCI.

Under Australian tax law, you cannot obtain a tax offset for Country X tax paid on the EDCI that is attributed to you under the transferor trusts rules. As mentioned at (vii) above, Country X tax paid by the trustee can be deducted from the EDCI to calculate attributable income.

Australian tax liability D Trust

Subsection 95(2) of the ITAA1936 provides that a trust estate will be resident in Australia if at any time during the year of income either:

a) the trustee of the trust estate is resident of Australia or

b) the central management and control is in Australia.

The trustees of the D Trust are you and your spouse.

The Beneficiaries of the D Trust are you and your spouse.

You and your spouse will be present in Australia continuously for the 201G to 202H calendar years.

D Trust is a resident trust estate for each of the income years, as at some point in time the central management and control of the trust is in Australia. As a consequence, Division 6 of the ITAA 1936 and not Division 6AAA will apply.

D Trust will calculate the net income of the trust estate for each income years as if it is a resident. Given the nature of the investments made by the trust, it is expected that the operation of section 95 of the ITAA 1936 would include all interest, dividend income and capital gains.

Under the domestic law unaffected by the treaty, you and your spouse would include in your assessable income:

● so much of your share of the net income of the trust estate, excluding any amount that has a foreign source and is attributable to a period when the they are not residents, disregarding their share of any capital gains (section 97 of the ITAA 1936, as affected by the operation of section 102UX of the ITAA 1936); and

● the capital gains to which you are entitled (Subdivision 115-C of the ITAA 1997) – to which the rules about discount capital gains can be applied.

You and your spouse will be entitled to a foreign tax offset for Country X tax you have paid on the income of the D Trust (subsection 770-10(1) of the ITAA 1997).

Acquisition of CGT assets

At the first point in time when the D Trust becomes a 'resident trust for CGT purposes’, the trustee is taken to have acquired all of the non-TAP CGT assets that the trustee owned except Taxable Australian Property (TAP) assets of the trust at their market values at that time (subsection 855-50(1) of the ITAA 1997). Subsection 855-50(2) states that the first element of the cost base and reduced cost base of an asset (at the time the trust becomes a resident trust for CGT purposes) is its market value at that time.

Foreign income tax offset and capital gains

Section 770-70 of the ITAA1997 states the amount of your tax offset for the year is the sum of the foreign income tax you paid that counts towards the offset for the year. Foreign income tax is defined in subsection 770-15(1) of the ITAA 1997 as including a tax imposed by a law other than an Australian law that is a tax on income, or profits or gains whether of an income or capital nature. Subsection 770-75(2) limits the offset allowable to the greater of $1000 and

● the amount of income tax payable by you for the income year less

● the amount of income tax that would be payable by you for the income year if the assumptions in subsection (4) were made.

The assumptions in subsection 770-75(4) of the ITAA 1997 include that your assessable income does not include any amounts of statutory income. The example provided in the legislation states

If an entity has paid foreign income tax on a capital gain that comprises part of its net capital gain, only that capital gain on which foreign income tax has been paid is disregarded.

Consequently, the foreign tax credit will be limited to the part of the foreign tax on the discounted amount of the gain.

Application of the Australia – Country X DTA

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.

The Protector Trusts and DTA

The terms of the DTA do not alter the operation of Division 6AAA of the ITAA 1936. Individuals taxed under the attribution rules will not have been beneficially entitled to that income. It is not income to which any of the Treaty Articles applies.

That the operation of the attribution rules in Division 6AAA of the ITAA 1936 is not precluded by the operation of the DTA is supported by the commentary on the OECD Model Convention 2014. At paragraphs 22 and 22.1:

22. Other forms of abuse of tax treaties (e.g. the use of a base company) and possible ways to deal with them, including “substance-over-form”, “economic substance” and general anti-abuse rules have also been analysed, particularly as concerns the question of whether these rules conflict with tax treaties…

22.1 Such rules are part of the basic domestic tax laws in determining which facts give rise to a tax liability; these rules are not addressed in tax treaties and are therefore not affected by them. Thus, as a general rule and having regard to paragraph 9.5, there will be no conflict. For example, to the extent that the application of the rules referred to in paragraph 22 results in a recharacterisation of income or in a redetermination of the taxpayer who is considered to derive such income, the provisions of the Convention will be applied taking into account these changes.

D Trust and the DTA

The character of income derived by D Trust, and any managed trust in which it holds investments, from their Country X investments, is passed to the trust beneficiaries (you and your spouse). This means that, for the income derived by the D Trust or managed trust that is of the type 'interest’ or dividend’, the specific Distributive Articles in the treaty for those kinds of income do not deal with it, and hence the Other Income Article (Article 21) will apply. It states that items of income of a resident of Country X, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in Country X. The operation of this Article, precludes Australia’s right to tax Country X dividend and interest income you receive from D Trust.

The position is different for capital gains, Article 13 of the DTA as amended by a Protocol that deals with capital gains. Article 13(7) states:

Except as provided in the preceding paragraphs of this Article, each Contracting State may tax capital gains in accordance with its domestic law.

As Article 13 deals with capital gains, the sweep up Article does not.

Question 10

Would amounts distributed from D Trust to you be exempted under Article 20 of the DTA dealing with students?

Summary

Article 20 of the DTA about payments received by students will not apply to exempt amounts distributed from D Trust to you.

Detailed reasoning

Article 20 states

Where a student, who is a resident of one of the Contracting States or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State for the purpose of his full-time education, receives payments from sources outside that other State for the purpose of his maintenance or education, those payments shall be exempt from tax in that other State.

Article 20 applies to payments that are made 'for the purposes of ….maintenance and education’. The facts of the arrangement do not demonstrate that any payments are made to you for these purposes.

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