ATO Interpretative Decision
ATO ID 2003/139 (Withdrawn)
international tax
Assessability of government employment income from the United KingdomFOI status: may be released
-
This ATO ID is withdrawn as the issue is now dealt with in Taxation Ruling 2005/8.This document incorporates revisions made since original publication.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Are the salary and wages earned by an Australian resident taxpayer from an Australian Government authority while working in the United Kingdom (UK) for a period of two years, assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. The salary and wages earned by an Australian resident taxpayer from an Australian Government authority while working in the UK for a period of two years are assessable under subsection 6-5(2) of the ITAA 1997.
Facts
The taxpayer is a resident of Australia for income tax purposes.
The taxpayer moved to the UK with their family when the spouse accepted a fixed three year contract of employment with an Australian Government authority.
The taxpayer is employed in the UK by another Australian Government authority for a fixed term of two years.
The taxpayer receives salary and wages from the Australian Government authority.
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, whether in or out of Australia, during the income year.
In determining liability to Australian tax on foreign source income 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).
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 1 to the Agreements Act contains the double tax agreement between Australia and the United Kingdom of Great Britain and Northern Ireland (the UK Agreement). The UK Agreement operates to avoid the double taxation of income received by Australian and UK residents.
Article 15 of the UK Agreement deals with governmental remuneration. Paragraph (1) of Article 15 of the UK Agreement provides that remuneration paid by the Australian Government to any individual for services rendered to the Australian Government in the discharge of governmental functions will be exempt from UK tax if the individual is not ordinarily resident in the UK.
As the taxpayer is not ordinarily a resident in the UK and is a resident of Australia for income tax purposes, the salary and wages earned from the Australian Government authority in the UK are assessable under subsection 6-5(2) of the ITAA 1997.
Date of decision: 5 February 2003Year of income: Year ended 30 June 2002 Year ending 30 June 2003 Year ending 30 June 2004
Legislative References:
Income Tax Assessment Act 1997
subsection 6-5(2)
section 4
Schedule 1
Schedule 1, Article 15
Schedule 1, paragraph (1) of Article 15
Keywords
Double tax agreements
Foreign income
International tax
United Kingdom
ISSN: 1445-2782
| Date: | Version: | |
| 5 February 2003 | Original statement | |
| You are here | 12 May 2006 | Archived |