Private ruling: Residency for taxation purposes
Date of advice: 23 January 2019
Published: May 2019
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will you be a resident of Australia for tax purposes while working in Country X? | A1: Yes Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). The terms ‘resident’ and ‘resident of Australia’, in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are: ● the resides test, ● the domicile test, ● the 183 day test, and ● the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. Based on the facts you have provided, we can conclude that you will satisfy the resides and domicile tests of residency. Accordingly you are a resident of Australia for income tax purposes under section 995-1(1) of the ITAA 1997 and subsection 6(1) of the ITAA 1936. | Q2: Will you be entitled to claim a credit for income tax paid in Country X? | A2: Yes Article 14 of the Double Tax Agreement (DTA) between Country X and Australia states that where a resident of Australia is exercising their employment in Country X then the salary, wages or other remuneration will be taxable in Country X. A credit for the tax paid in Country X is allowable according to Article 22 paragraph 1 of the DTA which states that Country X tax paid in respect of income derived by a person who is a resident of Australia from sources in Country X will be allowed a credit against Australian tax payable in respect of that income. Therefore you can claim a credit for tax paid in Country X against income that is also taxable in Australia.

Relevant facts and circumstances: You were born in the Country X. You moved to Australia in 20XX. You hold citizenship in both the Country X and Australia. You have a partner and children in Australia. Your parents live in the Country X. You only own real estate in in Australia. You have been working for your employer on a full time basis since 20XX. Your employer has two branches with one being in the Country X. Your employer decided to send you on an assignment in the Country X. At the end of the assignment you will return to Australia. Your partner will stay in Australia during the assignment.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1997 Subsection 995-1(1)