Private ruling: Residency and source of income
Date of advice: 26 September 2025
Published: 17 November 2025
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: XX XXXX 20XX

Ruling: Q1: Are you an Australian tax resident for the income years ended 30 June 20XX, 20XX, 20XX, 20XX and 20XX as defined by subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: No. | Q2: Is the income you derive from your Australian Bank interest subject to tax in Australia? | A2: Yes. | Q3: Is the income you derive from your international dividend income taxable in Australia? | A3: No. | Q4: Are the capital gains you make from trading international shares taxable in Australia? | A4: No.

Relevant facts and circumstances: You were born in Country A. You are a citizen and a tax resident of only Country A. You have a driver's license in Country A. You have a spouse and X children. You and your family live in Country A. You own you home in Country A. You are employed and earn income sourced in Country A. From XX XXXX 20XX, you started buying shares via share Markets Australia. The shares purchased are all foreign shares. You earn dividend income from these foreign shares. For a short period, you were in the Country B for a holiday. For a short period, you were in Country C for a holiday. On XX XXXX 20XX, you were granted a visitor visa in Australia. This visa does not allow you to stay in Australia permanently and you did not apply to have this visa extended. For a few weeks, you were in Australia for a holiday Your family did not accompany you to Australia as your children were in school. While in Australia, you did not develop any professional, social or sporting connections in Australia (e.g. sporting or social clubs, church groups etc.) While in Australia, you stayed in a hotel. You opened an Australian bank account. For a period, you were in Country D for a holiday. When traveling outside of Country A, you state Country A as your home country. In the future, you intend to remain in Country A and holiday outside of Country A every year for short periods. You are not a member of the Public Sector Superannuation Scheme (PSS) which was established under the Superannuation Act 1990 or an eligible employee in respect of the Commonwealth Superannuation Scheme (CSS) which was established under the Superannuation Act 1976 .

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) | Income Tax Assessment Act 1936 section 128B | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-20 | Income Tax Assessment Act 1997 section 855-10 | Income Tax Assessment Act 1997 section 855-15 | Income Tax Assessment Act 1997 section 995-1 | International Tax Agreements Act 1953

Reasons for decision: Detailed Reasoning - Question 1: For tax purposes, you are a resident of Australia if you meet at least one of the following tests. You are not a resident of Australia if you do not meet any of the tests. The resides test (otherwise known as the ordinary concepts test) • The domicile test • The 183-day test • The Commonwealth superannuation fund test. We have considered your circumstances and conclude that you were not a resident of Australia for tax purposes for the income years ended 30 June 20XX, 20XX, 20XX, 20XX or 20XX., as follows: • You were not a resident of Australia according to the resides test. • You do not meet the domicile test because your domicile is not in Australia. • You did not meet the 183-day test because you were not in Australia for 183 days or more during the income years ended 30 June 20XX, 20XX, 20XX, 20XX or 20XX. • You do not fulfil the requirements of the Commonwealth Superannuation test. For more information about residency, see Taxation Ruling TR 2023/1 Income tax: residency tests for individuals . | Detailed Reasoning - Question 2: Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a foreign resident taxpayer includes the ordinary income derived directly or indirectly from all Australian sources, and ordinary income that a provision includes in your assessable income for the income year on some basis other than having an Australian source. Sections 4 and 5 of the International Tax Agreements Act 1953 (Agreements Act) incorporate that Act with the ITAA 1936 and the ITAA 1997 and provide that the provisions of a double tax agreement have the force of law. In your case, you are a tax resident of Country A and are a foreign tax resident of Australia. Taxation Ruling TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreements discusses the Commissioner's views about interpreting double tax agreements. Paragraph 104 of TR 2001/13 provides that the OECD Model Tax Convention and Commentary will often need to be considered in interpreting double tax agreements. Under Article X of the double tax agreement (the DTA) between Australia and Country A: 1. Interest arising in a Contracting State, being interest of which a resident of the other Contracting State is the beneficial owner, may be taxed in that other State. 2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the interest. 3. The term "interest" in this Article means interest from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular income from Government securities or from bonds or debentures, and all other income that is assimilated to income from money lent by the law, relating to tax, of the Contracting State in which the income arises. ... In your case, the bank interest has an Australian source. Australia imposes interest withholding tax on interest paid to foreign residents. Article X of the DTA confirms that interest arising in Australia and paid to a Country A resident may be taxed in Australia. However, the maximum tax rate is capped at 10%, aligning with our domestic law. The Country A resident may also be taxed on this income in Country A, but Country A must provide relief from double taxation, typically via a foreign tax credit (if one is available). You should advise your Australian financial institution that you are a foreign resident so they can withhold tax in Australia at the time of payment. You won't need to declare this income in an Australian tax return. Your payer will then withhold the applicable tax. For further information search our website www.ato.gov.au for quick code (QC) 33221 - Interest, unfranked dividends and royalties. | Detailed Reasoning - Question 3: As the Markets Australia acts as a broker, the tax treatment depends on the source of the dividend, not the broker's location. You have provided facts to support that the dividends are all foreign sourced. As a foreign resident, your foreign sourced dividend income is not assessable in Australia. If you were to have Australian sourced dividends, these would be assessable in Australia. | Detailed Reasoning - Question 4: Under the rules in Division 855 of the ITAA 1997, a foreign resident is only subject to capital gains tax (CGT) in Australia on 'taxable Australian property'. Under section 855-15 of the ITAA 1997, taxable Australian property includes direct or indirect interests in Australian real property, CGT assets used in carrying on a business in Australia and mining, quarrying or prospecting rights to minerals, petroleum or quarry materials situated in Australia. However, section 855-10 of the ITAA 1997 outlines that a capital gain or loss from a CGT event is disregarded if you are a foreign resident just before the CGT event happens and the CGT event happens in relation to a CGT asset that is not taxable Australian property. As the shares are not taxable Australian property, and you will be a foreign resident when they are sold, you will be able to disregard any capital gain or capital loss made on their disposal made on their disposal under section 855-10 of the ITAA 1997.

The Australian bank interest has an Australian source and is subject to tax in Australia under section 128B of the Income Tax Assessment Act 1936 (ITAA 1936). | As the shares are not taxable Australian property, and you will be a foreign resident when they are sold, you will be able to disregard any capital gain or capital loss made on their disposal made on their disposal under section 855-10 of the Income Tax Assessment Act 1997 (ITAA 1997).