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Edited version of private ruling
Authorisation Number: 1011464895417
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Ruling
Subject: Foreign income
Question
Is your employment income earned in country X exempt from income tax in Australia?
Answer:
Yes.
This ruling applies for the following period/s:
Year ended 30 June 2010
The scheme commences on:
1 July 2009
Relevant facts and circumstances
You are a foreign (non) resident of Australia.
You are employed in the security industry in country X.
You are contracted to work on a six week cycle that is subject to change.
You are currently working eight weeks on and four weeks off.
You are paid only when on duty.
You are not paid while you are on leave in Australia.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(3)
Income Tax Assessment Act 1997 Subsection 6-15(2)
Reasons for decision
Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a foreign resident of Australia includes all ordinary income derived directly or indirectly from all Australian sources during the income year.
A foreign resident is a person who is not a resident of Australia.
Salary and wages are regarded as ordinary income.
Subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income.
The source of income derived from employment is generally the place where the duties or services are performed (Federal Commissioner of Taxation v. French (1957) 98 CLR 398; 11 ATD 288; (1957) 7 AITR 76).
In your case, your employment duties that are carried outside of Australia are considered to be sourced out of Australia. Therefore, the income derived in relation to such employment is not assessable under subsection 6-5(3) of the ITAA 1997 as you are a foreign resident.
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