Edited version of private advice

Authorisation Number: 1052208969542

Date of advice: 12 February 2024

Ruling

Subject: Australian resident for tax purposes

Question 1

Are you a resident of Australia for the period starting 1 July 20YY until the year ended 30 June 20AA under subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Answer

No.

Question 2

Are you a resident of Australia for the period starting 1 July 20AA until the year ended 30 June 20BB under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936?

Answer

Yes.

Question 3

Are you a resident of Australia for the period starting 1 July 20BB until the year ended 30 June 20CC under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936?

Answer

Yes.

Question 4

Are you a resident of Australia for the period starting 1 July 20CC until the year ended 30 June 20DD under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936?

Answer

Yes.

Question 5

Is the income from your employer based in the other country, assessable in Australia?

Answer

Yes.

This ruling applies for the following periods:

Year ending 20AA

Year ending 20BB

Year ending 20CC

Year ending 20DD

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

Background

The taxpayer was born in the other country and is a citizen of the other country.

The taxpayer met their spouse, who is a citizen of the other country, in Australia in 20XX.

The taxpayer was married in the other country in 20XX.

The taxpayer and their spouse have three children who were born in Australia as they had no confidence in the other countries' health system and preferred Australia.

The taxpayer's father and siblings reside in the other country.

The taxpayer and their spouse obtained permanent residency in Australia in 20XX and Australian citizenship in 20XX.

The taxpayer's father lived with them from 20XX in the other country until recent years, moved in with a sibling for daily care.

Property details and living arrangements

In 20XX, the taxpayer and spouse bought their first home in Australia.

From 20XX until 20XX, the taxpayer rented a property in the other country as part of their employment package.

In 20XX the taxpayer's spouse purchased an apartment in Australia in their own name so that they could live in Australia while studying.

The taxpayer and spouse jointly purchased an apartment in the other country in October 20XX. The taxpayer and spouse renovated and made improvements to the apartment. They employ staff to maintain the property.

The apartment in the other country stays vacant when the family are not staying there.

The taxpayer and spouse jointly purchased an investment property in Australia in October 20XX.

In April 20XX, the taxpayer and spouse purchased a new house in Australia for the spouse and children to live in.

In September 20XX, the taxpayer and spouse sold the investment property in Australia.

The taxpayer's spouse's travel and living arrangements

The taxpayer's spouse was living in Australia while studying in 20XX.

The taxpayer, spouse and three-month-old child, returned to the other country in September 20XX to live permanently.

The taxpayer's spouse returned to Australia in 20XX to give birth to their second child and returned to the other country eight weeks after the birth.

Between 20XX and 20XX, the taxpayer, spouse and children would visit friends in Australia once a year.

The taxpayer's spouse moved to Australia to study from January 20XX, until returning to work in the other country in June 20XX.

The taxpayer, spouse and two children returned to Australia on XX June 20XX for the taxpayer's spouse to give birth to their third child. Due to the Covid lock down and restrictions, travel occurred in the spouse's six-month maternity leave period.

The taxpayer's spouse and children have remained living in Australia for education for the children./p>

The taxpayer and spouse have an agreed arrangement where they live apart in different countries due to study, work commitments and wanting their children to go to school in Australia.

The spouse obtained part time employment in Australia in January 20XX and permanent full time employment since March 20XX.

The spouse, at present, is living and working in Australia with their children at the residence purchased in April 20XX.

Taxpayer Travel details

The taxpayer lived in the other country from 19XX until 20XX.

The taxpayer came to Australia in 20XX on a student visa for study purposes at university.

The taxpayer returned to the other country in 20XX.

The taxpayer returned to Australia for further studies in 20XX.

The taxpayer returned to the other country in 20XX permanently for work. The taxpayer is presently still working for the same employer.

The taxpayer left the other country with their family in 20XX to travel to Australia for their spouse to give birth. Due to Covid, the taxpayer was restricted to stay and live in Australia until the restrictions were lifted in 20XX. The taxpayer's employer allowed remote working arrangements until they could return to the other country. While in Australia, the taxpayer and their family lived in their investment property.

The taxpayer returned to live in the other country in January in 20XX when the travel restrictions were lifted. The apartment in the other country, was not rented out while the taxpayer was in Australia.

From January 20XX until January 20XX, the taxpayer commenced a hybrid way of living. The taxpayer would spend three weeks in Australia working remotely and two and half weeks in the other country, except for school holidays when the taxpayer's family would join them in the other country.

From January 20XX, the taxpayer's time spent in Australia consists of two to three weekends in Australia and spending two and half to four working weeks in the other country.

Overseas assets

Jointly owned apartment in the other country.

One family vehicle.

Shares via employee share plan.

Social security contributions.

Bank account.

Managed funds.

Australian assets

Jointly owned family home.

Joint bank account.

Two family vehicles.

Additional information

The taxpayer's name has been removed from the Australian electoral role.

The taxpayer has family health insurance in Australia with a Private Health fund.

The taxpayer's Australian financial institution and Private Health fund have been advised that the taxpayer is a foreign resident.

When entering Australia, the taxpayer ticks the passenger card as 'visiting family and friends'.

The taxpayer's spouse has employment with the Commonwealth of Australia Government and is a member of an Australian Super fund.

The taxpayer has lodged tax returns in the other country since 20XX.

The taxpayer has advised that they are a resident of the other country for tax purposes.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 995-1(1)

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 subsection 6-5(2)

Income Tax Assessment Act 1997 subsection 6-5(3)

International Tax Agreements Act 1953

Reasons for decision

Question 1

Summary

We have considered each of the statutory tests in relation to your particular facts and circumstances and as you do not meet the four tests of residency the Commissioner is satisfied that you are not a resident of Australia for taxation purposes for the ruling period 1 July 20XX to 30 June 20AA under subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936).

Question 2

Summary

We have considered each of the statutory tests in relation to your particular facts and circumstances and as you meet at least one of the four tests of residency, the Commissioner is satisfied that you are a resident of Australia for taxation purposes for the ruling period 1 July 20AA to 30 June 20BB under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.

Question 3

Summary

We have considered each of the statutory tests in relation to your particular facts and circumstances and as you meet at least one of the four tests of residency, the Commissioner is satisfied that you are a resident of Australia for taxation purposes for the ruling period 1 July 20BB to 30 June 20CC under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.

Question 4

Summary

We have considered each of the statutory tests in relation to your particular facts and circumstances and as you meet at least one of the four tests of residency, the Commissioner is satisfied that you are a resident of Australia for taxation purposes for the ruling period 1 July 20CC to 30 July 20DD under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.

Question 5

Is the income from your employer based in the other country, assessable in Australia?

Summary

Your ordinary income derived from outside of Australia is assessable in Australia undersubsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) for the income years that you are a resident of Australia under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936.

Detailed reasoning

For tax purposes, whether you are a resident of Australia is defined by subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936).

The definition has four tests to determine your residency for income tax purposes. These tests are:

• The resides test
• The domicile test
• The 183-day test, and
• The Commonwealth superannuation fund test.

It is sufficient for you to be a resident under one of these tests to be a resident for tax purposes.

Our interpretation of the law in respect of residency is set out in Taxation Ruling TR 2023/1 Income tax: residency tests for individuals. The following paragraphs outlines in this ruling when the Commissioner considers that a person will be a resident of Australia.

Paragraph 4 explains that residency under the first 3 tests is determined by considering all of your relevant facts and circumstances. No single fact determines the outcome, and the significance of facts varies from case to case. Because of this, there are no 'bright-line rules' or any single factor that can be said to be paramount.

Paragraph 5 further states that residency is about your connection to Australia, and you can be a resident for tax purposes of more than one country at the same time.

Paragraph 15 considers that you are a resident if you meet any one of the tests. It does not matter if you do not meet any of the other tests. You are not a resident if you do not meet any of the tests. This means that you must consider all applicable tests before concluding you are a non-resident.

Paragraph 16 explains that to determine your residency status, it is appropriate to look beyond the period you have spent in (or out of) Australia. Factors from the entire income year and surrounding income years provide more information to help determine whether you meet one of the residency tests.

The resides test

The resides test is the primary test of tax residency for an individual. If you reside in Australia according to the ordinary meaning of the word resides, you are considered an Australian resident for tax purposes.

Some of the factors that can be used to determine whether you reside in Australia include:

• Period of physical presence in Australia
• Intention or purpose of presence
• Behaviour while in Australia
• Family and business/employment ties
• Maintenance and location of assets
• Social and living arrangements.

No single factor is decisive, and the weight given to each factor depends on your specific circumstances.

Where an individual does not reside in Australia according to ordinary concepts, they will still be an Australian resident if they meet the conditions of one of the other tests.

The domicile test

Under the domicile test, if your domicile is in Australia, you are a resident of Australia unless the Commissioner is satisfied that your permanent place of abode is outside Australia.

Whether your domicile is Australia is determined by the Domicile Act 1982 and the common law rules on domicile. For example, you may have a domicile by origin (where you were born) or by choice (where you have changed your home with the intent of making it permanent).

Whether your permanent place of abode is outside Australia is a question of fact to be determined in light of all the facts and circumstances of each case. Key considerations in determining whether you have your permanent place of abode outside Australia are:

• Whether you have abandoned, in a permanent way, living in Australia
• Length of overseas stay
• Nature of accommodation, and
• Durability of association.

The 183-day test

Under the 183-day test, if you are present in Australia for 183 days or more during the income year, you will be a resident, unless the Commissioner is satisfied that both:

• Your usual place of abode is outside Australia, and
• You do not intend to take up residence in Australia.

The question of usual place of abode is a question of fact and generally means the abode customarily or commonly used by you when physically in a country.

The Commonwealth Super Test

An individual is a resident of Australia if they are either a member of the superannuation scheme established by deed under the Superannuation Act 1990 or an eligible employee for the purposes of the Superannuation Act 1976, or they are the spouse, or the child under 16 of such a person.

Assessable Income

Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

Salary and wages are ordinary income for the purposes of subsection 6-5(2) and subsection 6-5(3) of the ITAA 1997.

Conclusion

Income tax year 1 July 20YY to 30 June 20AA

The taxpayer was living in the other country while working from XX July 20XX, in an apartment which was purchased jointly with the taxpayer's spouse in October 20XX. The taxpayer's spouse was living in a different city in the other country while working from *July 20XX. The taxpayer and spouse had an agreed arrangement where they would live apart to pursue their career goals. The children moved from the other country in July 20XX, where they were living with the taxpayer, to move to the other city to live with their mother.

Both the taxpayer and spouse had hired help to assist with maintaining the living residence and help with the children in both their living properties. The spouse would travel to the other city on weekends to spend with their family. The taxpayer and spouse jointly purchased an investment property in October 20XX in Australia.

On the XX June 20XX, the taxpayer, spouse and children, chose to come to Australia due to the upcoming birth of their third child and international travel being restricted due to Covid.

The Commissioner is satisfied that during the income tax year ending 30 June 20AA, the taxpayer does not satisfy any of the four tests under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 to be identified as an Australian resident for tax purposes.

Income tax year 1 July 20AA to 30 June 20BB

From 1 July 20AA until 30 June 20BB, the taxpayer, spouse and children continued to live in Australia, in their investment property for the entire time. The taxpayer was able to work remotely for his employer, but unable to travel back to Vietnam due to Covid travel restrictions.

Ordinary Concepts

Paragraphs 12 and 13 of TR 2023/1 explains that the ordinary concepts test is generally relevant when you are physically present in Australia and considers residency according to ordinary concepts. The other 3 tests (domicile test, 183-day test and Commonwealth superannuation fund test) expand the definition beyond the ordinary concept of residency. The domicile and Commonwealth superannuation fund tests are generally relevant if you have been living in Australia but are not currently present in Australia, or present only intermittently during the relevant income year. The domicile test considers whether your domicile is in Australia and whether your permanent place of abode is outside Australia.

As per TR 2023/1 paragraph 15, you are a resident if you meet any one of the tests. It does not matter if you do not meet any of the other tests. You are not a resident if you do not meet any of the tests. This means that you must consider all applicable tests before concluding you are a non-resident.

The following paragraphs of TR 2023/1 explains details of the 'ordinary concepts test'.

Paragraph 17, under the ordinary concepts test, you are a resident if you reside in Australia.

Paragraph 18, the term 'reside' is not defined in the Australian income tax law and has its ordinary meaning.

Paragraph 19, the ordinary meaning has been expressed as 'to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place'.

Paragraph 20, the ordinary concepts test is asking whether your presence in Australia is usual and settled in contrast to temporary and casual. This is informed by both the nature, duration and quality of the person's physical presence and an intention to treat Australia as home.

In this case, the Commissioner is satisfied that the taxpayer resided in Australia due to the actual physical presence in Australia for the whole of the 2021 income year.

Although the reason the taxpayer did not return to the other country was due to Covid restrictions, the taxpayer satisfies the resides test to be considered a resident of Australia for tax purposes under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 for the period of 1 July 20AA until 30 June 20BB.

Income tax year 1 July 20BB to 30 June 20CC

The Commissioner is satisfied that under the 'ordinary concepts' as above, that the taxpayer spent a considerable time living (and working remotely for their employer from the other country) in Australia, (fulltime between XX July 20CC until January 20XX and three weeks in then two and half out intermittently until XX June 20XX) demonstrating a strong physical presence in Australia. The taxpayer's time in Australia had a usual and settled contrast as the nature of staying in Australia was to be with their spouse, who had permanent employment (part time from January 20XX transitioning to full time in March 20XX), their children, who were going to school, and also, living in a residence which they had jointly purchased in August 20XX (they moved into another residence which was jointly purchased in April 20XX), using their two owned vehicles and jointly owned Australian bank account.

As per paragraph 20 of TR 2023/1, the taxpayer satisfies a number of the factors that commonly inform the relevant association with Australia.

•         period of physical presence in Australia

•         intention or purpose of presence

•         behaviour while in Australia

•         family, and business or employment ties

•         maintenance and location of assets, and

•         social and living arrangements

As per paragraph 22 of TR 2023/1, many of the factors outlined in paragraph 20 of this Ruling are interrelated. For example, continued family connections are often also accompanied by assets in Australia (such as a house, furniture or a motor vehicle) and behaviour consistent with a familiar routine while in Australia. Temporary visitors often have few assets and few social connections. The taxpayer's family connections and assets in Australia interact to form a strong association with Australia.

Paragraph 39 of TR 2023/1 considers that where your intention changes, and you stay longer in Australia than initially intended, the facts surrounding the entire stay in Australia must be considered, not merely the original intended length of stay. For example, if during your stay in Australia you decide to migrate to Australia, you are regarded as resident from the time that your behaviour becomes consistent with residing here. Paragraph 40 continues, similarly, if you stay in Australia because you cannot or do not depart when you initially planned, you may continue to be a resident, or become a resident, while your behaviour is consistent with residing here.

Behaviour while in Australia

The following paragraphs of TR 2023/1 discus behaviour while in Australia when determining characteristics of residing here.

Paragraph 41, your behaviour relevantly includes the way you live as part of the regular order of your life. If the way you live reflects a degree of continuity, routine or habit, coupled with other factors such as intention, it may be consistent with residing in Australia.

Paragraph 42, for example, if you enter Australia and take up long-term accommodation, employment, enrol children in school and take part in regular extracurricular activities, this would demonstrate behaviour consistent with residing here, particularly when coupled with other factors such as an intention to make your home here.

Paragraph 43, conversely, if you usually live overseas and, while in Australia, you travel around or display no settled routine or behaviour, or you have only a short period, or short periods, of settled routine or behaviour coupled with an intention to holiday in Australia before returning home to another country, you will likely not be regarded as a resident under the ordinary concepts test.

Paragraph 44, some individuals work in a number of countries during their careers. They often maintain a house in their country of domicile. However, for the period of their assignment in Australia, they live and work here. Their family often accompany them, their children attend school here and they may become involved in social activities while present in Australia. Although these individuals regard themselves as residing or permanently resident in their home country or may be regarded as residents of their home country for its tax purposes, their behaviour while in Australia may mean they are also residing here for Australian income tax purposes.

Family, and business or employment ties

The following paragraphs of TR 2023/1 discuss ties to Australia when considering if an individual is residing here.

Paragraph 46, The presence (or absence) of your family also informs the nature of your connection to Australia. The presence of immediate family in Australia is often accompanied by increased connections to Australia (including period of physical presence, assets such as a family home and motor vehicles, and an intention to return to a place you consider to be your home) and a settled routine consistent with residing in Australia.

Paragraph 48, while the test is about whether you reside in Australia, the presence or absence of family, and the extent of business or employment ties in the overseas country will be relevant in giving context to your connection to Australia. Business or employment ties overseas may be less significant if they can be, and are, performed from anywhere in the world.

Paragraph 49, generally speaking, working overseas but returning to Australia at intervals to an established family and social life will often mean you are still residing in Australia. This is the case even if you spend more time overseas than in Australia in any given income year. Usually, such an arrangement indicates you are residing in Australia and another country. Having an ongoing, deliberate connection to Australia even though you have a connection to another country through your work does not make you a mere visitor to Australia. In such a case, Australia is your home and you are properly regarded as residing here.

In this case, when considering the above, the taxpayer maintains a residence in their country of domicile and is a resident of the other country for tax purposes. For the time that they spend in Australia, their behaviour is more than merely a holiday and gives the appearance they are also residing here for income tax purposes.

The Commissioner is satisfied that the immediate family presence, the spouse having permanent employment, the children enrolled in school, the Australian assets and the taxpayer's presence in Australia, show a strong, ongoing connection to Australia and a behaviour consistent with someone who resides here. The taxpayer's employment ties overseas are less significant as they work remotely while in Australia for their overseas employer showing they can work anywhere in the world.

Due to the above circumstances, the Commissioner is satisfied that the taxpayer is considered a resident of Australia for tax purposes under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 for the period of 1 July 20XX until 30 June 20XX.

Income tax year 1 July 20CC to 30 June 20DD

Sometimes your stated intentions will be in contrast to your intentions as shown through your behaviour or actions.

The taxpayer intends to continue to live and work remotely in their family home three weekends in Australia out of four weeks. The period of time that you spend in Australia is not, by itself, decisive in determining your residency status.

The taxpayer and their spouse obtained permanent residency in Australia in 20XX and Australian citizenship in 20XX. The taxpayer's spouse and children have the appearance of living permanently in Australia for the foreseeable future. The taxpayer's family, the maintenance and location of assets in Australia (family home, joint bank account, two family vehicles), the taxpayer continuing to work while visiting family in Australia and consistent behaviour having a degree of continuity, routine and habit, satisfies the Commissioner that the taxpayer resides in Australia.

As per TR 2023/1 paragraphs 4, 5, 15, and 16, the Commissioner, in this case, considered not only one single fact, but also the taxpayer's connections to Australia (spouse and children living here), that it is possible to be a resident for tax purposes of more than one country at a time (Australia and the other country), surrounding income years and that the taxpayer only needs to meet one of the tests to be considered a resident for tax purposes.

Paragraph 10 of TR 2023/1 states residency for tax purposes is a question of fact based on an individual's connection to Australia. Due to the taxpayer's family ties and assets in Australia and the other country, the Commissioner is satisfied that the taxpayer has not abandoned either country.

The taxpayer satisfies the resides test to be considered a resident of Australia for tax purposes under subsection 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936 for the period of 1 July 20CC until 30 June 20DD.

Dual resident

You can be a resident of more than one country at the same time. In determining your residency status, it is important to consider your circumstances in deciding whether you're an Australian resident.

When you have dual residency, any relevant double tax agreements may determine which country has taxing rights over certain classes of income to prevent double taxation. In some cases, this may have the effect of limiting Australia's taxing rights.

Paragraph 108 of TR 2023/1 explains, it is possible to be a resident for tax purposes of more than one country at the same time in respect of an income year or part of an income year. A double-tax agreement (DTA) may apply to allocate income to one or both countries and it may do this by allocating residency to one country for an income year or part of an income year, but only for that purpose under 'tie-breaker' tests. Even if a DTA allocates your residency to another country, you remain a resident of Australia for Australian tax purposes and will be taxed on that basis to the extent it is not inconsistent with the allocation rules in the DTA.

Tax Treaties

Tax treaties are formal bilateral agreements between two jurisdictions. Australia has tax treaties with more than 40 jurisdictions.

A tax treaty is also referred to as a tax convention or double tax agreement (DTA). They prevent double taxation and fiscal evasion, and foster cooperation between Australia and other international tax authorities by enforcing their respective tax laws.

How to work out if you're affected by a tax treaty

Your residency status determines the jurisdiction in which you pay income tax and how much tax you are liable to pay. Most tax treaties include a 'tie-breaker' test under which a dual resident is deemed to be a resident solely of one of the two jurisdictions for the purposes of taxation.

Resolution of dual residence and dual source cases

The following paragraphs of TR 2001/13 discus the resolution of dual residence and dual source cases.

Paragraph 12 explains, unrelieved double taxation can arise where, because of differing domestic law rules, two countries both claim to be the country of 'residence' of the taxpayer and/or the country of 'source' of the income concerned. Moreover, as these are the basic criteria for the distribution or allocation of taxing rights under a DTA, it is important that they be clearly defined for the purposes of the DTA.

Paragraph 13 states, the DTAs contain 'tie-breaker' rules to ensure that a dual resident 'person' (whether an individual, company or other entity) is treated as a resident of only one of the countries for the purposes of applying the DTA. These tie-breaker rules do not directly affect whether the person is a resident of a country at domestic law - the 'person' remains a domestic law resident of each country. Therefore, a dual resident who is treated as solely a resident of another country for the purposes of an Australian DTA remains a resident of Australia for the purposes of the Assessment Act.

Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the 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).

The Convention between the Government of Australia and the Government of [the other country] for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on income and on Capital Gains. The agreement is located on the Austlii website (http://www.austlii.edu.au/) in the Australian Treaties Series database. The agreement operates to avoid the double taxation of income received by residents of Australia and the other country.

Article 15of the agreement advises that salaries, wages and other similar remuneration derived by a resident of Australia shall be taxable only in Australia unless the employment is exercised in the other country. If the employment is exercised in the other country then the income may also be taxed in the other country."

The Convention' (also referred to as the Double Tax Agreement between the other country and Australia) discusses at Article 4 'Residence' of persons residing in either or both contracting states.

This article is important in 3 scenarios:

1)    In determining a conventions personal scope of application,

2)    In solving cases where double taxation arises in consequence of double residence,

3)    In solving cases where double taxation arises as a consequence of taxation in the State of residence and in the State of source or situs.

In your case you are a resident for tax purposes of the other country and Australia under respective domestic laws. In these situations the Convention provides tie breaker tests at Paragraph 3 of Article 4;

Where by reason of the preceding provisions of this Article a person, being an individual, is a resident of both Contracting States, then the status of the person shall be determined in accordance with the following rules:

(a) the person shall be deemed to be a resident solely of the Contracting State in which a permanent home is available to the person;

(b) if a permanent home is available to the person in both Contracting States, or in neither of them, the person shall be deemed to be a resident solely of the Contracting State with which the person's economic and personal relations are closer."

Permanent home

In Taxation Ruling TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreements, the Commissioner accepts that it is appropriate to have reference to the OECD Model Tax Convention and Commentary (OECD Commentary) which provides guidance on the interpretation of the terms used in double tax agreements.

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

• 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 (e.g. travel for pleasure, business travel, attending a course etc.).
• 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.

In this situation, the taxpayer has an apartment in the other country which they jointly own with their spouse, does not rent it out and has staff employed to maintain it. The taxpayer stays in the apartment while in the other country. The family stay there with the taxpayer when in the other country.

When in Australia the taxpayer stays with their immediate family in the house that they jointly own with their spouse.

As the taxpayer has residences in both countries which are always available continuously for their use, they have a permanent home in Australia and in the other country.

Taxation Ruling TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreementsat paragraphs 101 to 105 explains the Commissioner's view that the OECD Model Tax Convention and Commentaries are relevant to interpreting Australia's tax treaties.

A permanent home according to OECD commentary:

"means a place where the individual owns or possess a home; this home must be permanent, that is to say, the individual must have arranged and retained it for his 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 OECD commentary on Article 4, paragraph 2, item 9 states:

"In the opinion of the other country the personal relations and economic relations

mentioned in paragraphs 14 and 15 of the Commentary should be separated and one

given priority over the other. For Vietnam, economic relations, particularly the

criterion of the country where employment is exercised, is more important to

determine the country of residence for treaty purposes in the case of a dual resident" individual".

In conclusion, the taxpayer is a resident of Australia for taxation purposes however, in accordance with the Double Taxation Agreement, the other country has taxing rights on the salary and wages that the taxpayer receives from their employer who is based in the other country.