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Edited version of private advice
Authorisation Number: 1051629178935
Date of advice: 3 February 2020
Ruling
Subject: Residency for tax purposes
Question 1
Are you a foreign resident of Australia for tax purposes and therefore taxed only on any Australian sourced income?
Answer
Yes
As you do not satisfy any of the four tests of residency, you are not a resident of Australia for income tax purposes.
As a foreign resident, you must lodge a tax return in Australia and pay tax on all Australian-sourced income, except for income that has been subject to withholding tax (such as interest, unfranked dividends and royalties).
Question 2
Is the business income earned while you are in Australia conducting your legal business assessable in Australia?
Answer
No
The Double Tax Agreement between Australia and Country A means that income of a Country A Business is not assessable in Australia unless it has a Permanent Establishment in Australia which you do not.
This ruling applies for the following periods:
Year ending 30 June 2019
Year ending 30 June 2020
The scheme commences on:
X XX 2019
Relevant facts and circumstances
You were born in Country A and remain a citizen of that country.
You became a resident of Australia for tax purposes for several years.
You eventually became self employed as a sole legal practitioner in Australia. The business is not an incorporated legal practice or partnership so has no separate legal existence from you and you have no other employment in that country.
You later moved to Country C where you married your spouse who is a permanent resident of that country and you intend to live there permanently.
Some months after you moved to Country C you were issued with a resident permit which is valid for 2 years.
You currently live in a rented property with a lease of indefinite duration with your spouse and child and you intend to purchase a property in the future.
Since arriving in Country C, you have purchased a motor vehicle and established bank accounts and credit cards and have advised your banks in Australia of your overseas address in order for them to deduct non-resident withholding tax if applicable.
You have severed all social connections and memberships in Country B.
It is your intention to apply for citizenship and a passport in Country C soon.
You do not intend to visit or reside in Australia at any time in the future except for essential business trips, however you retain a virtual office in Australia and have established a physical office in Country C.
You have disposed of all assets in Australia and your personal possessions, furniture and other household effects are located in Country C.
You have advised Medicare to remove your name from its records and cancelled your private health insurance policy.
The only form of investment you have in Australia is a Superannuation account which you intend to withdraw the funds from and close once you have obtained citizenship in Country C.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 Subsection 995-1