The Tax Institute welcomes the opportunity to make a submission to the Australian Taxation Office (ATO) in relation to draft Taxation Ruling TR 2022/D2: Income tax: residency tests for individuals (draft Ruling).
In the development of this submission, we have closely consulted with our National Taxation of Individuals Technical Committee to prepare a considered response that represents the views of the broader membership of The Tax Institute.
We have also had the opportunity to review the submission prepared by Business Law Section of the Law Council of Australia (LCA) in relation to the draft Ruling. Subject to our comments below, we endorse the views and concerns raised by the LCA in their submission.
Residency is an important issue that is pertinent to all residents and visitors of Australia and can significantly impact a taxpayer’s obligations. Taxpayers often face difficulty when applying the legislation to their circumstances, given the complex factual enquiry required. This difficulty is multiplied by recent changes in case law and the evolving nature of the world we live in.
The Tax Institute supports the release of guidance materials that better assists taxpayers and tax practitioners in determining their residency status. Subject to the comments below, and the concerns raised in the LCA’s submission, we broadly consider that the draft Rulingprovides a detailed analysis of the legislative requirements and key changes in recent case law that an individual needs to understand and apply when determining their tax residency status.
However, The Tax Institute is of the view that the draft Ruling could be better supported with additional guidance and examples to assist taxpayers and tax practitioners.