ATO Interpretative Decision
ATO ID 2001/775
Income Tax
Salary and wage income derived from employment in Norfolk Island - exempt incomeFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the taxpayer's salary and wage income derived from employment in Norfolk Island, assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. The taxpayer's salary and wage income derived from employment in Norfolk Island is not assessable under section 6-5 of the ITAA 1997 as it is exempt from tax under section 24G of the Income Tax Assessment Act 1936 (ITAA 1936).
Facts
The taxpayer will be employed in Norfolk Island for three years.
The contract of employment binds the taxpayer to a continuity of service.
The duties of the taxpayer's position will be performed wholly within the boundaries of Norfolk Island.
Reasons for Decision
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. However, if an amount is exempt income, it is not included in the assessable income of a taxpayer (section 6-15 of the ITAA 1997).
Section 24G of the ITAA 1936 provides an exemption from tax in Australia on certain income derived from employment in a prescribed Territory. Section 24BB of the ITAA 1936 provides that Norfolk Island is a prescribed territory.
Paragraph 24G(1)(e) of the ITAA 1936 provides that the exemption will apply where income is derived by a person from employment wholly or mainly performed in Norfolk Island for the requisite period. The Commissioner must be satisfied that at the commencement of that employment the taxpayer intended to remain in Norfolk Island for a continuous period of more than 6 months.
The taxpayer's employment will be wholly performed within the boundaries of Norfolk Island. The posting is for a period of three years and the terms of the contract of employment indicate the requisite continuity of service. Therefore, the salary and wage income the taxpayer will derive from employment in Norfolk Island will be exempt from tax pursuant to section 24G of the ITAA 1936.
Legislative References:
Income Tax Assessment Act 1936
subsection 24BB
section 24G
paragraph 24G(1)(e)
section 6-5
subsection 6-5(2)
Keywords
Exempt income
Australian external territories
Norfolk Island
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 1 October 2001 | Original statement |
| 6 June 2014 | Updated statement | |
| 10 June 2016 | Updated statement |