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Edited version of private advice
Authorisation Number: 1051979562798
Date of advice: 6 May 2022
Ruling
Subject: Disposal of options - foreign resident
Question 1
Does Article 13(X) of the Double Tax Agreement (DTA) between Australia and Country Z give Country Z sole taxing rights over the gain made on the disposal of the options?
Answer
Yes.
Question 2
Do you need to include the capital gain made on the disposal of the options in the relevant Australian tax return?
Answer
No.
Article 13(X) of the DTA between Australia and Country Z states that an individual who elects, under the taxation law of a Contracting State, to defer taxation on income or gains relating to property which would otherwise be taxed in that State upon the individual ceasing to be a resident of that State for the purposes of its tax, shall, if the individual is a resident of the other State, be taxable on income or gains from the subsequent alienation of that property only in that other State.
Based on the information provided to the Commissioner, Article 13(X) of the DTA between Australia and Country Z gives the sole taxing rights on the capital gain made on the disposal of the options to Country Z.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are a resident of Country Z for taxation purposes.
You have not been a resident of Australia for taxation purposes for several years.
While a resident of Australia for taxation purposes you acquired options in an Australian private company.
The options were non-taxable Australian property.
You held these options when you became a resident of Country Z for taxation purposes.
You did not report a capital gains event in your Australian tax return and therefore chose to defer any capital gains tax liability on the options.
The options were disposed of and you made a capital gain on the disposal.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 104-160
Income Tax Assessment Act 1997 section 104-165