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This edited version has been archived due to the length of time since original publication.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: 1051323878709

Date of advice: 3 January 2018

Ruling

Subject: Residency

Question and answer

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

No.

This ruling applies for the following period:

Year ended 30 June 2016

Year ended 30 June 2017

Year ending 30 June 2018

Year ending 30 June 2019

Year ending 30 June 2020

Year ending 30 June 2021

The scheme commenced on:

27 August 2015

Relevant facts and circumstances

You are a resident of both Australia and country Y for taxation purposes.

You have a permanent home available to you in Country Y.

You do not have a permanent home available to you in Australia.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 6-5.

International Tax Agreements Act 1953 Sch33-Art4

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 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 2 of Article 4 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.

Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then that individual’s status shall be determined as follows:

You only have a permanent home available to you in Country Y.

Therefore for the purposes of the double tax agreement you are not a resident of Australia.

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).