Private ruling: Residency status
Published: April 2013
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2012

Ruling: Question and answer: | Will XYZ Trust be a resident Australian trust for income tax purposes? | No.


Relevant legislative provisions: Income Tax Assessment Act 1997, Subsection 995-1(1). | Income Tax Assessment Act 1936, Subsection 6(1). | Income Tax Assessment Act 1936, Subsection 95(2).

Reasons for decision: Summary: Subsection 95(2) of the Income Tax Assessment Act, provides that a trust estate shall be taken to be a resident trust estate in relation to a year of income if; (a) a trustee of the estate was a resident at any time during the year of income; or (b) the central management and control of the trust estate was in Australia at any time during the year of income. | Detailed Reasoning - Trustee a resident of Australia: In the case of XYZ Trust, the sole trustee of the trust will cease to be a resident of Australia. Therefore XYZ Trust will not be a resident Australia trust once the trustee ceases to be an Australian resident, under this test. | Detailed Reasoning - Location of central management and control: This test focuses on management and control decisions that guide and control the company's business activities. This level of management and control involves the high level decision making processes, including activities involving high level company matters such as general policies and strategic directions, major agreements and significant financial matters. It also includes activities such as the monitoring of the company's overall corporate performance and the review of strategic recommendations made in the light of the company's performance. In the case of XYZ Trust, the high level decision making process in regards to the management and control of the trust will be conducted by the sole trustee. As the sole trustee will be based permanently in country D it is considered that the location of central management and control for the trust will be in country D. Further the trust will be administered in country D. Therefore XYZ Trust will not be a resident Australia trust under the 'location of central management and control test'. | Detailed Reasoning - Conclusion: Accordingly, as XYZ Trust will not satisfy any of the tests, it will not be an Australian resident trust.

Relevant facts: XYZ Trust was established in Australia. | The sole trustee and appointer of XYZ was an Australian resident for income tax purposes, however they will leave Australia permanently and become a non-resident of Australia for income tax purposes. | When the trustee leaves Australia they intend to continue to operate XYZ Trust overseas. | In doing so the trustee has found an accountant in Country D to administer the trust. | Once this occurs the XYZ Trust will be operated and administered by the trustee solely in country D.