Private ruling: Residency
Date of advice: 20 October 2015
Published: October 2015
Ruling period: Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2009

Ruling: Question and answer | Is Company X a resident of Australia for tax purposes? | No.

Relevant facts and circumstances: Company X is a wholly owned subsidiary of Company Y (an Australian incorporated company) which is wholly owned by Trust X. The trustee of the Trust X is Company Z which is an Australian incorporated company. Individual X and individual Y are the sole directors of Company Y and Company Z. Company X was incorporated in a foreign country. At the time of incorporation, the directors of Company X were all foreign residents and included individual X and individual Y (former Australian residents) who were tax residents of a foreign country at the time. Individual X and individual Y have been the sole directors of Company X since 20XX when the foreign directors resigned. Individual X and individual Y returned to Australia to reside prior to 20XX. The only asset of Company X is a leveraged holding in a commercial property in a foreign country and its sole source of income is rent from the property. Company X has not, and does not, derive income from Australian sources or conduct any business activities in Australia. Company X has at all times considered itself to be a non-resident of Australia for tax purposes.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1)

Reasons for decision: Summary: Subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) states that a company is a resident of Australia for taxation purposes if: • it is incorporated in Australia, or • although not incorporated in Australia, it carries on business in Australia, and has either: • its central management and control in Australia, or • its voting power controlled by shareholders who are residents of Australia. In this case, Company X was incorporated in a foreign country and its central management and control moved to Australia in 20XX. However, regardless of the central management and control of Company X moving to Australia or the residency of its shareholders being in Australia, it can only be a resident of Australia if it carries on business in Australia. From the information provided, Company X has not, and does not, derive income from Australian sources or conduct any business activities in Australia. Therefore, Company X has not carried on business in Australia and has continued to be a foreign resident from 20XX.