ATO Interpretative Decision
ATO ID 2002/344 (Withdrawn)
Income Tax
Non-resident professor in receipt of Australian employment incomeFOI status: may be released
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This ATO ID is withdrawn from the database because it contains references to the tax treaty between Australia and France that was replaced with a new tax treaty and associated protocol (Schedule 11) which entered into force on 1 June 2009. Despite its withdrawal from the database, this ATO ID continues to be a precedential view in respect of decisions up to, and including, 30 June 2010.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 Australian sourced income received by a resident of France while researching in Australia, assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. Australian sourced income received by a resident of France while researching in Australia is assessable income under section 6-5 of the ITAA 1997 as the taxpayer will be employed in Australia for a period exceeding two years.
Facts
The taxpayer is a professor in a French University.
The taxpayer will be employed in Australia as a medical research academic. The employer is an Australian research organisation. The taxpayer's salary is sourced in Australia.
The taxpayer's period of employment will exceed two years.
The taxpayer is not a resident of Australia for income tax purposes.
Reasons for Decision
Subsection 6-5(3) of the ITAA 1997 provides that ordinary income derived by a non-resident directly or indirectly from Australian sources, as well as other ordinary income included by a provision on a basis other than having an Australian source, is assessable. Statutory income from all Australian sources, or included by a provision on a basis other than having an Australian source, is also included in a non-resident's assessable income under subsection 6-10(5) of the ITAA 1997.
Salary and wages are ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997.
In determining liability to tax on Australian sourced income received by a non-resident, it is necessary to consider not only the income tax laws but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (the Agreements Act).
Schedule 11 to the Agreements Act contains the double tax agreement between Australia and the French Republic (the French Agreement). The French Agreement operates to avoid the double taxation of income received by Australian and French residents.
Paragraph (1) of Article 14 of the French Agreement provides that salary and wages derived by a resident of France for employment exercised in Australia may be taxed in Australia.
However, this paragraph is subject to the conditions contained in Article 19 of the French Agreement. Article 19 of the French Agreement provides that a resident of France, who visits Australia for a period which does not exceed two years for the purposes of teaching or conducting research at a university, college, school or educational institution, will only be taxed in France.
As the taxpayer will be employed in Australia for a period exceeding two years, the conditions for Article 19 of the French Agreement to apply will not be met. Under Article 14 of the French Agreement, the salary and wages paid by the taxpayer's Australian employer may be taxed in Australia. Accordingly, the income will be assessable in Australia under section 6-5 of the ITAA 1997.
Date of decision: 4 March 2002
Legislative References:
Income Tax Assessment Act 1997
section 6-5
subsection 6-5(3)
subsection 6-10(5)
Schedule 11
Schedule 11, Article 14
Schedule 11, Article 14(1)
Schedule 11, Article 19
Keywords
Double tax agreements
France
Non resident individuals
School teachers
ISSN: 1445-2782
| Date: | Version: | |
| 4 March 2002 | Original statement | |
| You are here | 10 December 2010 | Archived |