ATO Interpretative Decision
ATO ID 2005/29 (Withdrawn)
Income Tax
Assessability of salary and wages received by an Australian resident individual working in MonacoFOI status: may be released
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This ATO ID is withdrawn from the database due to legislative changes to section 23AG of the Income Tax Assessment Act 1936 which took effect from 1 July 2009. Despite its withdrawal, this ATO ID continues to be a precedential view in respect of decisions for income years up to, and including, the 2008/2009 income year.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 received by an Australian resident taxpayer while working in Monaco assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. The salary and wages received by an Australian resident taxpayer while working in Monaco are assessable under subsection 6-5(2) of the ITAA 1997 as the salary and wages are not exempt under subsection 23AG(1) of the Income Tax Assessment Act 1936 (ITAA 1936).
Facts
The taxpayer is a resident of Australia for income tax purposes.
The taxpayer is employed by a Monaco based company for work performed in Monaco in excess of 91 days.
The law of Monaco does not provide for the imposition of income tax.
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.
Salary and wages are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.
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. Included in this list is section 23AG of the ITAA 1936 which deals with overseas employment income.
Subsection 23AG(1) of the ITAA 1936 provides that where a resident is engaged in foreign service for a continuous period of not less than 91 days, foreign earnings derived from that service will be exempt. 'Foreign service' includes service in a foreign country in the capacity of an employee (subsection 23AG(7) of the ITAA 1936). 'Foreign earnings' includes salary and wages income (subsection 23AG(7) of the ITAA 1936).
Subsection 23AG(2) of the ITAA 1936 provides that no exemption is available under subsection 23AG(1) of the ITAA 1936 in circumstances where an amount of foreign earnings derived in a foreign country is exempt from tax in the foreign country solely because of:
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- a double tax agreement or a law of a country that gives effect to such an agreement (paragraphs 23AG(2)(a) and 23AG(2)(b) of the ITAA 1936)
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- a law of that foreign country which generally exempts from, or does not provide for, the imposition of income tax on income derived in the capacity of an employee, income from personal services or any other similar income (paragraphs 23AG(2)(c) and 23AG(2)(d) of the ITAA 1936), or
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- a law or international agreement dealing with privileges and immunities of diplomats or consuls or of persons connected with international organisations (paragraphs 23AG(2)(e), 23AG(2)(f) and 23AG(2)(g) of the ITAA 1936).
There is no double tax agreement between Australia and Monaco. Further, the law of Monaco does not provide for the imposition of income tax on employment income. Therefore, paragraph 23AG(2)(d) of the ITAA 1936 will apply because the salary and wages earned in Monaco are not taxable in Monaco.
Accordingly, the salary and wages received by an Australian resident taxpayer while working in Monaco are assessable under subsection 6-5(2) of the ITAA 1997 as the salary and wages are not exempt under subsection 23AG(1) of the ITAA 1936.
Date of decision: 14 December 2004Year of income: Year ended 30 June 2002 Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1936
subsection 23AG(1)
subsection 23AG(2)
paragraph 23AG(2)(a)
paragraph 23AG(2)(b)
paragraph 23AG(2)(c)
paragraph 23AG(2)(d)
paragraph 23AG(2)(e)
paragraph 23AG(2)(f)
paragraph 23AG(2)(g)
subsection 23AG(7)
subsection 6-5(2)
subsection 6-15(2)
section 11-15 Related ATO Interpretative Decisions
ATO ID 2004/84
Keywords
Exempt income
Foreign income
Foreign salary & wages
ISSN: 1445-2782
| Date: | Version: | |
| 14 December 2004 | Original statement | |
| You are here | 25 February 2011 | Archived |