Private ruling: Residency
Date of advice: 3 January 2018
Published: May 2018
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 27 August 2015

Ruling: Question and answer | Are you a resident of Australia for the purposes of the tie breaker provision of the double Taxation Agreement between Australia and Country Y? | No.

Relevant facts and circumstances: You are a resident of both Australia and country Y for taxation purposes. You have a permanent home available to you in Country Y. You do not have a permanent home available to you in Australia.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5. | International Tax Agreements Act 1953 Sch33-Art4 Reasons for decision | 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. | 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 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 2 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. | Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then that individual’s status shall be determined as follows: | the individual shall be deemed to be a resident only of the State in which a permanent home is available to that individual; if a permanent home is available in both States, 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); | You only have a permanent home available to you in Country Y. | Therefore for the purposes of the double tax agreement you are not a resident of Australia.