ATO Interpretative Decision

ATO ID 2002/737

Income Tax

• This ATO ID contains references to repealed provisions, some of which may have been re-enacted or remade.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.

Issue

Is the taxpayer's income as a visiting Argentine researcher 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 Argentine researcher is not assessable under subsection 6-5(3) of the ITAA 1997.

Facts

The taxpayer is a resident of Argentina and is a non resident for Australian taxation purposes.

The taxpayer is professor.

The taxpayer will be in Australia for a period of less than 2 years.

The taxpayer was invited by a recognised Australian educational institution to visit Australia for the purpose of undertaking research. The taxpayer will be employed by the Australian educational institution.

The research undertaken by the taxpayer was not undertaken for the private benefit of a specific person or persons.

The income derived by the taxpayer is subject to tax in Argentina.

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 or 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.

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).

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 44 to the Agreements Act contains the double tax agreement between Australia and the Argentine Republic (the Argentine Agreement). The Argentine Agreement operates to avoid the double taxation of income received by Australian and Argentine residents.

Paragraph (1) of Article 20 of the Argentine Agreement provides that where a professor or teacher who is a resident of Argentina:

•

visits Australia for a period not exceeding 2 years;

•

for the purpose of teaching or carrying out advanced study or research at an Australian university, college, school or other educational institution wholly or mainly supported by public funds;

any remuneration they receive from those activities will be exempt from tax in Australia to the extent to which that remuneration is or will be subject to tax in Argentina.

However if the research is undertaken primarily for the private benefit of a specific person or persons then Article 20 of the Argentine Agreement will not apply (paragraph (2) of Article 20 of the Argentine Agreement).

The taxpayer is a professor who is visiting Australia for a period of less than 2 years for the purpose of undertaking research at an educational institution. The income received by the taxpayer is taxable in Argentina. The income will therefore be exempt from tax in Australia and the taxpayer will not be assessable on this income under subsection 6-5(3) of the ITAA 1997.

Year of income:  Year ended 30 June 2000

Legislative References:
Income Tax Assessment Act 1997
   subsection 6-5(3)

Keywords
Academic staff
Argentina
Double tax agreements
Exempt income

Siebel/TDMS Reference Number:  CW3018309

Business Line:  Small Business/Individual Taxpayers

Date of publication:  31 July 2002

ISSN: 1445-2782