Private ruling: Residency for tax purposes
Published: August 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Question and answer | Are you a resident of Australia for taxation purposes under the double tax agreement between Australia and Country Y? | Yes.

Relevant facts and circumstances: You are a resident for taxation purposes in both Australia and Country Y. You are a citizen and national of both Australia and Country Y. You have been living in Australia for a number of years. You live with your spouse in Australia. You have a home in Australia which you share with your spouse, which your spouse owns. You live in Australia for the majority of the year. You return to Country Y for some of the year. Your spouse spends some of the time with you in Country Y. You have homes in Country Y. You have the following personal and economic relations in Australia: · you are physically present in Australia for the majority of the year · your spouse resides in Australia · when in Australia you stay in the home owned by your spouse · your spouses children reside in Australia · you are a member of a number of social groups · you have connections with your work colleagues · you have a shared super fund with your in Australia · You are employed in Australia You have the following personal and economic relations in Country Y: · you are physically present in Country Y for a period of time each year · you have family in Country Y · you are a member of a number of groups · you are a member of a religious congregation · you own homes in Country Y · you are a member of a number of professional organisations

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5. | International Tax Agreements Act 1953 Sch4-Art19.

Reasons for decision: Summary: 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 non-resident of Australia for taxation purposes, your assessable income includes only income from an Australian source. Pension income is ordinary income assessable under subsection 6-5(2) of the ITAA 1997. In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements. Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (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). Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. The Country Y Agreement is listed in section 5 of the Agreements Act. The Country Y agreement is located on the Austlii website (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 Country Y. In your case, you are a resident of both Australia and Country Y for tax purposes, according to each country's domestic law. Paragraph 3 of Article 4 of the double tax agreement sets out the factors to be considered when determining a person's residence for the purpose of the agreement, where the person is a resident of both Australia and Country Y under domestic law. The status of an individual who, by reason of the preceding provisions of this Article is a resident of both Contracting States, shall be determined as follows: · that individual shall be deemed to be a resident only of the Contracting State in which a permanent home is available to that individual; but if a permanent home is available in both States, or in neither of them, that individual shall be deemed to be a resident only of the State with which the individual's personal and economic relations are closer (centre of vital interests); · if the Contracting State in which the centre of vital interests is situated cannot be determined, the individual shall be deemed to be a resident only of the State of which that individual is a national; · if the individual is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall endeavour to resolve the question by mutual agreement. You have a permanent home available to you in both Australia and Country Y. Therefore, we need to consider which country your personal and economic relations are closer. You have the following personal and economic relations in Australia: · you are physically present in Australia for the majority of the year · your spouse resides in Australia · when in Australia you stay in the home owned by your spouse · your spouses children reside in Australia · you are a member of a number of groups · you have connections with your work colleagues · you have a super fund with your spouse in Australia · you are employed in Australia You have the following personal and economic relations in Country Y: · you are physically present in Country Y for a period of time each year · you have family in Country Y · you are a member of a number of groups in Country Y · you are a member of a religious congregation · you own homes in Country Y · you a member of a number of professional organisations In considering your personal and economic relations to both Australia and Country Y as listed above, the facts of your situation show that you have stronger ties to Australia because you live in Australia with your spouse for over half of each year, you have employment in Australia as well as numerous social connections. As your personal and economic relations are stronger in Australia than in Country Y, for the purposes of the double tax agreement, you are a resident of Australia.

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