Edited version of private ruling

Authorisation Number: 1011698428068

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Ruling

Subject: Residency

Question:

Are you deemed to be a resident solely of Australia under the relevant Article of the International Tax Agreements Act 1953 between Australia and Country A to which you have moved to?

Answer:

Yes

This ruling applies for the following periods:

Year ending 30 June 2011

Year ending 30 June 2012

The scheme commences on:

1 July 2010

Relevant facts and circumstances

You are an Australian resident for taxation purposes.

You are a resident of Country A for taxation purposes.

Your partner has been seconded for an extended period to work in Country A.

You moved to Country A in the 2010-11 income year.

You expect to return to Australia in the 2011-12 income year.

You intend to return to Australia once your partner's secondment is completed although you may holiday outside Australia prior to your return.

You have a permanent home in Australia which is not being rented out while you are overseas.

Your home still contains your personal belongings.

Your partner's employer has provided you with an apartment which is partially furnished.

You will work remotely for an Australian employer on a part-time basis.

You occasionally work on a temporary part-time basis in Country A for the Country A foreign branch of an Australian company.

You have a bank account in Country A.

You own a rental property in Australia which has been let whilst you are overseas.

You have maintained your bank accounts in Australia.

You have maintained your health insurance in Australia.

You have maintained your motor vehicle in Australia.

Relevant legislative provisions

International Tax Agreements Act 1953

Reasons for decision

The relevant article of the International Tax Agreements Act 1953 between Australia and Country A (Country A Agreement) provides tests of residency, which are used where the individual would otherwise be a resident of two countries ('tie breaker tests'). The tie breaker tests ensure that the individual is only treated as a resident of one country for the purposes of working out liability to tax on their income. The tie breaker tests do not change a taxpayer's residency status for domestic law purposes.

The relevant article of the Country A Agreement provides that a person's residency status for the purpose of applying the Country A Agreement shall be determined as follows:

a) the person shall be deemed to be a resident of the country in which he/she has a permanent home available

b) if the person has a permanent home in both countries, or does not have a permanent home in either, the person will be deemed to be a resident of the country in which the person's economic and personal relations are the closer.

The person's citizenship or nationality of one of the countries shall be a factor in determining the degree of his/ her personal and economic relations to that country.

Taxation Ruling TR 2001/13 discusses the Commissioner's views about interpreting tax treaties. Paragraph 104 of TR 2001/13 states that the OECD Model Tax Convention and Commentary (OECD Commentary) will often need to be considered in interpreting tax treaties.

The OECD Commentary provides that in relation to a 'permanent home':

a) for a home to be permanent, an individual must have arranged and retained it for his or her permanent use as opposed to staying at a particular place under such conditions that it is evident that the stay is intended to be of short duration. The dwelling has to be available at all times continuously and not occasionally for the purposes of a stay, which owing to the reasons for it is necessarily of short duration (eg travel for pleasure, business travel, attending a course etc)

b) any form of home may be taken into account, including a house or apartment belonging to or rented by the individual and a rented furnished room.

As you have residences in both Australia and Country A which are available at all times continuously for your permanent use, you are considered to have a permanent home in both countries.

In determining which country your personal and economic ties are closer to, 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 relation to your personal ties to Australia: you continue to maintain health insurance, bank accounts and a car in Australia. Many of your personal effects are still located in your residence in Australia.

In relation to your personal ties to Country A: you reside in a partially furnished house provided by your employer.

In terms of your economic ties to Australia: you own a rental property in Australia and are continuing to work for an Australian employer on a remote basis whilst in Country A.

In relation to your economic ties to Country A: you have a bank account in Country A and work on a temporary part-time basis in Country A for the Country A branch of an Australian company.

The Commissioner considers that on the balance of factors you are an Australian resident for the purposes of the Country A Agreement under Article 4(3)(b) as your personal and economic ties are closer with Australia than with Country A.