Private ruling: Residency
Date of advice: 6 March 2026
Published: 6 July 2026
Ruling period: DD MM YYY
Date scheme commenced: DD MM YYYY

Ruling: Q1: Are you a resident of Australia for taxation purposes? | A1: No. | Q2: Is the Director's Allowance you receive from a Company included in your assessable income under section 6-5 of the ITAA 1997? | A2: Yes | Q3: Is Australian tax payable by you for the shares you received from a Company? | A3: Yes | Q4: When you sell the shares you hold in a Company, will you need to report capital gains and losses? | A4: No

Relevant facts and circumstances: You were born in Country A. You remain a citizen of Country A. You moved to Australia with your parents when you were a child. You became a citizen of Australia shortly thereafter. You do not intend on applying for citizenship in another country. You have a spouse, who is a citizen of Country B. On DDMMYYYY you became a non-executive director of the Company. You are required to call into board meetings to provide independent oversight and strategic guidance. You receive a director's fee from the Company. The Company is an Australian resident company, listed on the Australian Stock Exchange. On MM YYYY you relocated from Australia to a Country C to take up an employment opportunity. When you left Australian you sold all of your Australian real property. Whilst you lived in Country C you purchased a property to live in. You have a Country C driver's license, you surrendered your Australian driver's license in YYYY. You moved all of your personal belongings from Australia to Country C. On DDMMYYYY you acquired a number of zero priced options. On DDMMYYYY consolidation of capital resulted in a number of zero priced options being consolidated to fewer zero exercised priced options. On DDMMYYYY you acquired a number of Class A performance rights and Class B Performance Rights. On DDMMYYYY you received a letter from the Company with an offer of performance share rights. These shares were to expire on either the earlier of the date X years from DDMMYYYY or change of control of the company. You had until DDMMYYYY to accept this offer. You accepted this offer on DDMMYYY. These shares were classed as follows: • Class A Performance Rights which will vest on achievement of a specified volume weighted average price (VWAP) over 5 consecutive trading days. • Class B Performance Rights which will vest on achievement of a specified VWAP over 5 consecutive trading days. • Class C Performance Rights which will vest on achievement of a specified VWAP over 5 consecutive trading days. In MMYYYY you moved to Country D to take up full time employment. On DDMMYYYY you became a tax resident of Country D. You have a working visa in Country D. The property you purchased in Country C was sold when you left. You provided documents showing a permanent place of abode in Country D. You rent this property. Your family did not follow you to Country D. When you left employment in Country C, your family were not able to continue to reside in Country C. When you relocated to Country D your spouse and a child moved to Country B, they reside in a residential property that is owned by your spouse. Your child is on a tourist visa. Another child is attending a boarding school in Australia. You are intending to stay in Country D for X to X years. After this period of time you are likely to settle in Country B. You financially support spouse and Children. You have not informed Medicare or the Australian Electoral Commission that you have departed Australia. You intend to come back to Australia for short vacations. You have an Australian bank account. You told the bank you have left Australia. You have a bank account in Country C. You have a bank account in Country D. You hold shares in Australian companies. On DDMMYYYY performance rights were exercised and converted to ordinary shares. On DDMMYYYY zero exercised priced options were converted to ordinary shares. As of the DDMMYYYY you hold X zero exercised priced options, Y performance rights and Z Class B performance rights. You do not need board approval to dispose of the shares. Your current intention is to exercise more options when they are more profitable or above the strike price. Your ownership in the company does not exceed 10%. You have not disposed of any of the shares. Australia and Country C have a double tax agreement. Australia and Country D do not have a double tax agreement.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-10 | Income Tax Assessment Act 1997 section 10-5 | Income Tax Assessment Act 1997 section 15-2 | Income Tax Assessment Act 1997 section 995-1 | Income Tax Assessment Act 1997 Division 83A | Income Tax Assessment Act 1997 section 83A-10 | Income Tax Assessment Act 1997 section 83A-25 | Income Tax Assessment Act 1997 Division 855 | 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 section 4 | International Tax Agreements Act 1953 schedule 3 | Superannuation Act 1976 | Superannuation Act 1990

Reasons for decision: Summary: No. You will not be a resident of Australia for the purposes of subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) for the financial year ended 30 June 2024. | Detailed Reasoning - Overview of the law: 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 ITAA 1936. The terms 'resident' and 'resident of Australia', as applied to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition offers four tests to ascertain whether each individual taxpayer is a resident of Australia for income tax purposes. These tests are: • the resides test (also referred to as the ordinary concepts test) • the domicile test • the 183-day test, and • the Commonwealth superannuation fund test. The resides test is the primary test for deciding the residency status of an individual. This test considers whether an individual resides in Australia according to the ordinary meaning of the word 'resides'. 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, 183-day test and Commonwealth superannuation fund test). Our interpretation of the law in respect of residency is set out in Taxation Ruling TR 2023/1 Income tax: residency tests for individuals . We have considered the statutory tests listed above in relation to your situation as follows: | Detailed Reasoning - The resides test: The ordinary meaning of the word 'reside' 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': See Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99 per Latham CJ, citing Viscount Cave LC in Levene v Inland Revenue Commissioners [1928] AC 217 at 222, citing the Oxford English Dictionary. Likewise, the Macquarie Dictionary defines 'reside' as 'to dwell permanently or for a considerable time; have one's abode for a time'. The observations contained in the case of Hafza v Director-General of Social Security (1985) 6 FCR 444 are also important: Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place - even involuntarily: see Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 248; and Keil v Keil [1947] VLR 383 - a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place - Levene v Inland Revenue Commissioners [1928] AC 217 at 225 and Judd v Judd (1957) 75 WN (NSW) 147 at 149 - together with an intention to return to that place and an attitude that that place remains "home": see Norman v Norman (No 3) (1969) 16 FLR 231 at 235 ... here the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as "home", a change of intention may be decisive of the question whether residence in a particular place has been maintained. The Commissioner considers the following factors in relation to whether a taxpayer is a resident under the 'resides' test: • 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. It is important to note that no one single factor is decisive, and the weight given to each factor depends on each individual's circumstances. Because the resides test is about whether an individual resides in Australia, the factors focus on the individual's connection to Australia. Having a connection with another country, or being a resident of another country, does not diminish any connection to Australia. The ordinary meaning of reside does not require an individual to have a principle or usual place of residence in Australia. | Detailed Reasoning - 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 definitely abandoned, in a permanent way, living in Australia • length of overseas stay • nature of accommodation, and • durability of association. | Detailed Reasoning - 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 are physically in a country. | Detailed Reasoning - The Commonwealth superannuation 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. | Detailed Reasoning - Application to your situation: You are not a resident of Australia under the resides test from your departure date based on the following: • Physical presence ­ You will not be physically in Australia after your departure date, except for short periods of vacation. • Intention or purpose ­ You intend to live in Country D for the next X-X years. • Behaviour - Prior to departing Australia, you: o Notified your Australian banks that you are now a non-resident. o Sold your Australian property. o Sold your Australian belongings. • Family or employment ties ­ You commenced employment in Country C and subsequently commenced employment in Country D. ­ Your spouse and X child lives in Country B. ­ You have X child residing in Australia and attending boarding school. ­ You have X adult children who are independent and reside in Australia. • Maintenance and location of assets ­ You purchased a property in Country C ­ You currently own the following Australia assets: o Australian ASX listed shares o Cash savings in Australian banks. ­ You currently own the following overseas assets: o A bank account in Country C o A bank account is Country D • Social connections ­ You have not informed us of any social memberships in Australia. You may still be an Australian resident if you meet the conditions of one of the other tests (the domicile test, 183-day test and Commonwealth superannuation fund test). We also consider that although your domicile of origin is Country A, you also became a citizen of Australia, at some point your domicile of choice became Australia. However, the Commissioner is satisfied that your permanent place of abode is currently outside Australia. We considered the following factors in forming our conclusion: • You left Australia in MMYYYY and moved to the Country B. • While working in Country C you were on a working visa. • You moved from Country C to Country D in MMYYYY. • While working in Country D you are on a working visa. • While living in Country C you purchased a property there. • You rent a property in Country D. You will not be in Australia for 183 days or more during the 2026 income year. You do not fulfil the requirements of the Commonwealth Superannuation test and are therefore not a resident under this test. | Detailed Reasoning - Issue: Source of Income | Detailed Reasoning - Question 2: Is the Director's Allowance you receive from Waratah Minerals included in your assessable income under section 6-5 of the ITAA 1997? | Summary: Yes. In this case, we have determined that the income you receive as a director's allowance for your role as a non-executive director does have an Australian source. However, this decision is based on the facts relating to your situation and cannot automatically be applied to other taxpayers who work remotely overseas for an Australian employer. Each situation must be considered on a case-by-case basis by weighing up the importance of the various factors. | Detailed Reasoning - Detailed reasoning: Subsection 6-5(3) of the ITAA 1997 provides that the assessable income of a non-resident taxpayer includes ordinary income derived directly or indirectly from all Australian sources during the income year and other ordinary income that a provision includes as assessable income on some basis other than having an Australian source. Director's fees are ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997. The Organisation for Economic Co-operation and Economic Development (OECD) Commentary provides that in relation to Article 16: Since it might sometimes be difficult to ascertain where the services are performed, the provision treats the services as performed in the State of residence of the company. The OECD Commentary further provides that Article 16 would not apply to a member of a board of a company exercising their function in the capacity of an ordinary employee, adviser or consultant. Australia, as the country of residence of the company, being the country of source, has the primary right to tax the director's fees paid by the company to the taxpayer as a member of its board of directors on account of services rendered. In determining liability to Australian tax on foreign sourced income, it is necessary to consider not only the income tax laws, but also any applicable double tax agreements contained in the International Tax Agreements Act 1953 (Agreements Act 1953). Section 4 of the Agreements Act 1953 incorporates that Act with the ITAA 1936 and the ITAA 1997 so that those Acts are read as one. Australia and Country D do not have a double taxation agreement (DTA). In the absence of such a treaty, there is no bilateral instrument capable of modifying or displacing the ordinary operation of domestic tax law or the interpretation principles reflected in the OECD Commentary. Accordingly, nothing in international treaty law operates to override or limit reliance on the OECD Commentary in this context. | Detailed Reasoning - Application to your situation: You are a non-executive director on the board of the company, which is an Australian resident company. You provide independent oversight and strategic direction. You log in remotely to perform your duties as a non-executive director. You receive a director's fees for this work, that the company withholds tax from. Since Australia and Country D do not have a DTA in place, the commentary from the OECD is relevant. You are not an employee of the company and therefore commentary in relation to an ordinary employee, advisor or consultant is not relevant. As Australia is the state of residence of the company the Director's fees your income from these fees is considered Australian source income and therefore is assessable income in Australia. | Detailed Reasoning - Issue: Employee Share Scheme - Foreign Resident | Detailed Reasoning - Question 3: Is Australian tax payable by you for the shares in the company received under section 6-10 of the ITAA 1997? | Summary: Yes. The discount on options granted to you under an employee share scheme, as a foreign resident for tax purposes, in respect of services you provide as a non-executive director of an Australian-resident company, constitutes assessable income under subsection 6-10(5) of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: Subsection 6-10(5) of the ITAA 1997 provides that the assessable income of a foreign resident taxpayer includes statutory income from all Australian sources and other statutory income that a provision includes as assessable income on some basis other than having an Australian source. Section 10-5 of the ITAA 1997 lists those provisions about assessable income. Included in this list is subsection 15-2(3) of the ITAA 1997 which provides for the taxation of shares and rights acquired under employee share acquisition schemes. An employee share scheme is defined by subsection 83A-10(2) of the ITAA 1997 as a scheme under which employee share scheme interests in a company are provided to employees of the company (or a subsidiary of the company) in relation to the employee's employment. Pursuant to section 83A-25 of the ITAA 1997, the discount given in relation to a share or right acquired under an employee share scheme is included in the taxpayer's assessable income. The discount on the options granted to you, in respect of services provided by the taxpayer as a non-executive director of the Australian company, is a discount given in relation to a right acquired under an employee share scheme pursuant to subsection 83A-25(1) of the ITAA 1997. As you provided the services in Australia, the exclusion of subsection 83A-25(2) of the ITAA 1997 does not apply. Accordingly, the discount is statutory income to be included in the taxpayer's assessable income as determined under Division 83A of the ITAA 1997. In determining liability to Australian tax, it is necessary to consider not only the income tax laws, but also any applicable tax treaties contained in the Agreements Act 1953. Section 4 of the Agreements Act incorporates 1953 that Act with the ITAA 1936 and the ITAA 1997 so that those Acts are read as one. Schedule X to the Agreements Act contains the tax treaty between Australia and Country C. This Agreement operates to avoid the double taxation of income received by Australian and Country C residents. Article X of the Convention with Country C provides that directors' 'fees and other similar payments' derived by a resident of Country C, in the capacity as a member of the board of directors of a company which is a resident of Australia, may be taxed in Australia. Taxation Ruling TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreements provides the Commissioner's views on interpreting tax treaties. Paragraph 104 of TR 2001/13 provides that the 'OECD Model Tax Convention on Income and on Capital' and Commentary will often need to be considered in interpreting tax treaties. Paragraph 108 of TR 2001/13 provides that often the changes that have occurred to the relevant OECD Commentaries over time will need to be examined and considered. Article X of the Convention with Country C is virtually identical to that contained in the OECD Model Tax Convention on Income and on Capital. Paragraph 1.1 of the OECD Commentary on Article 16 of the OECD Model Tax Convention on Income and on Capital states that: Member countries have generally understood the term 'fees and other similar payments' to include benefits in kind received by a person in that person's capacity as a member of the board of directors of a company (e.g. stock-options, the use of a residence or automobile, health or life insurance coverage and club memberships). Paragraph 3.1 of the OECD Commentary on Article 16 further provides that the article will apply to any benefit derived from the option itself until it has been exercised, sold or otherwise alienated (for example upon cancellation or acquisition by the company or issuer). The discount is a benefit that constitutes 'fees and other similar payments' to which Article X of the Country C Protocol applies. Therefore, Australia, being the country of source, has the right to tax the discount derived by the taxpayer as a member of the board of directors of the company. Australia and Country D do not have a double taxation agreement. In the absence of such a treaty, there is no bilateral instrument capable of modifying or displacing the ordinary operation of domestic tax law or the interpretation principles reflected in the OECD Commentary. Accordingly, nothing in international treaty law operates to override or limit reliance on the OECD Commentary in this context. Accordingly, the discount on options granted under an employee share scheme will be included in the taxpayer's assessable income under subsection 6-10(5) of the ITAA 1997. | Detailed Reasoning - Application to your situation: You are a non-executive director on the board of the Company, which is an Australian resident company. Your engagement as a non-executive director is an employment-like activity and the fees you receive are Australian sourced income. The shares you acquired through the employee share scheme options were not subject to any restrictions of sale. You received the offer to acquire the options for shares whilst a resident of Country C for tax purposes and exercised this right while a resident of Country D for tax purposes. Therefore, the discount for the shares you received is statutory income and need to be included in your Australian assessable income. | Detailed Reasoning - Issue: Employee share scheme - capital gains tax | Detailed Reasoning - Question 4: When you sell the shares held in the company, will you need to report capital gains or losses on these shares sold under Division 855 of the ITAA 1997? | Summary: No. As you are not an Australian resident for tax purposes you are not required to report capital gains or losses on the disposal of shares in the company. | Detailed Reasoning - Detailed reasoning: Generally, a discount you receive on shares, rights or stapled securities you acquire under an ESS is included in your assessable income when you acquire the beneficial interest in those shares, rights or securities. Under the rules in Division 855 of the ITAA 1997, a foreign resident is only subject to 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. | Detailed Reasoning - Application to your situation: You are not an Australian resident for tax purposes. As the benefit you gained from exercising the options will be realised when you realise the shares the ESS taxing point is not deferred. Shares disposed of in Waratah Minerals while you are not an Australian resident for tax purposes are not subject to capital gains tax. This is because shares are not considered real property.