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Edited version of private ruling
Authorisation Number: 1011868709681
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Ruling
Subject: Residency for tax purposes
Questions and answers:
1) Are you a resident of Australia for tax purposes?
Yes.
2) Is your employment income taxable in Australia?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
The scheme commenced on:
1 July 2008
Relevant facts and circumstances
You are a citizen of Australia.
Your spouse is a citizen of Country X.
You are a permanent resident of Country X.
You are employed by an Australian government authority.
You contribute to an eligible superannuation scheme.
You have a fixed term employment contract in Australia.
At the end of your contract you will be returning to Australia.
Your employment duties are carried out in Country Y and Australia.
You do not carry out your employment duties in Country X.
You own a house in Australia which you consider to be your main residence. When you are not in Australia the house remains empty and is not rented out.
You also have the following Australian assets - an ownership interest in an investment property, an investment fund and three bank accounts.
You and your spouse have a car and a bank account in Country X.
When you are working in Country Y, your family stay with your spouse's family in Country X.
When you are working in Country Y your employer provides your accommodation.
When you have free time you return to Country X where you stay with your spouse's family.
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 foreign resident, your assessable income includes only income derived from an Australian source.
A person will be considered a resident of Australia for tax purposes under the Commonwealth superannuation fund test if they currently contribute to certain superannuation funds for Commonwealth government employees. The eligible funds are funds:
· established under the Superannuation Act 1976 (such as the Commonwealth Superannuation Scheme), or
· established under the Superannuation Act 1990 (such as the Public Sector Superannuation Scheme), or
· the spouse or child under 16 of a person covered by either of the above funds.
In your case, you are a government employee and you contribute to a superannuation scheme which was established under the Superannuation Act 1990. Therefore, you are a resident of Australia under this test.
As you are a resident under this statutory test, it is not necessary to consider which, if any, of the other tests of residency you meet.
As you are a resident of Australia, according to section 6-5 of the ITAA 1997, your assessable income includes income gained from all sources, whether in or out of Australia.
Tax treaty between Australia and Country X
An article of the tax treaty between Australia and Country X considers where tax on remuneration from government service should be paid.
Article states:
(2) Remuneration, other than a pension or annuity, paid by one of the Contracting States or a political subdivision or local authority of that State to any individual in respect of services rendered in the discharge of governmental functions shall be taxable only in that State. However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the recipient is a resident of that other State who:
(a) is a citizen or national of that State; or
(b) did not become a resident of that State solely for the purpose of performing the services.
In your case, you receive employment income from an Australian government authority. You perform your employment duties in Australia and Country Y. You do not perform your employment duties in Country X.
Therefore, in accordance with Article 19 of the tax treaty, your employment income is only taxable in Australia.