ATO Interpretative Decision
ATO ID 2002/498
Income Tax
Assessability of income received by a visiting South Korean AcademicFOI status: may be released
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This ATO ID contains references to repealed provisions, some of which may have been re-enacted or remade. The ATO ID is current in relation to the re-enacted or remade provisions.
Australia's tax treaties and other agreements except for the Taipei Agreement are set out in the Australian Treaty Series. The citation for each is in a note to the applicable defined term in sections 3AAA or 3AAB of the International Tax Agreements Act 1953.
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 income as a visiting South Korean professor assessable income under subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. The taxpayer's income as a visiting South Korean professor is not assessable income under subsection 6-5(3) of the ITAA 1997.
Facts
The taxpayer is a resident of South Korea and is a non resident for Australian taxation purposes.
The taxpayer is a professor.
The taxpayer will be in Australia for less than 2 years.
The taxpayer has been invited by a recognised Australian educational institution to visit Australia solely for the purposes of teaching and research. The taxpayer will be employed by the Australian educational institution.
Reasons for Decision
Subsection 6-5(3) of the ITAA 1997 provides that the assessable income of a non resident taxpayer includes income derived directly and indirectly from all Australian sources during the income year.
Employment income is ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997. However, subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income. Section 11-15 of the ITAA 1997 lists those provisions dealing with income which may be exempt. There are no provisions listed in section 11-15 of the ITAA 1997 exempting the taxpayer's income earned while in Australia.
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 Agreement Act 1953 (the Agreements Act).
Section 4 of the Agreements Act incorporates that Act with the ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited provisions).
Schedule 22 to the Agreements Act contains the double tax agreement between Australia and the Republic of Korea (the Korean Convention). The Korean Convention operates to avoid the double taxation of income received by Australian and Korean residents.
Article 20 of the Korean Convention provides that a resident of Korea who visits Australia at the invitation of an educational institution, for a period not exceeding 2 years, solely for the purpose of teaching or research shall be taxable only in Korea.
As the taxpayer meets the requirements of Article 20 of the Korean Convention their income as visiting professor will be exempt from tax in Australia and therefore not assessable under subsection 6-5(3) of the ITAA 1997.
Date of decision: 15 February 2002Year of income: Year ended 30 June 2001 Year ending 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
subsection 6-5(3)
subsection 6-15(2)
section 11-15
section 4
Schedule 22
Schedule 22, Article 20
Keywords
Academic staff
Exempt income
Double tax agreements
Korea
ISSN: 1445-2782