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Edited version of private ruling
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Ruling
Subject: Foreign Income - Foreign Resident
Question:
Is the foreign employment income you will derive as a foreign resident for income tax purposes in Australia, assessable income in Australia?
Answer:
No.
This ruling applies for the following period:
Year ending 2010-11.
The scheme commenced on:
July 2010.
Relevant facts
You are a foreign resident for income tax purposes in Australia.
Some time in the 2010-11 income year, you will have derived employment income from working in Country A.
You state that you are considering taking up an employment offer and returning to Australia some time later in the 2010-11 income year. If you take up this offer, you will become an Australian resident for income tax purposes from when you arrive some time later in Australia during the 2010-11 income year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(3)
Income Tax Assessment Act 1997 Subsection 6-10(5)
Reasons for decision
Subsection 6-5(3) of the Income Tax Assessment 1997 (ITAA 1997) provides that ordinary income derived by a foreign resident directly or indirectly from Australian sources, as well as ordinary income included by a provision on a basis other than having an Australian source is assessable.
Statutory income from all Australian sources is also included in a foreign resident's assessable income under subsection 6-10(5) of the ITAA 1997.
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; (1957) 11 ATD 288; (1957) 7 AITR 76).
In your case, you are a foreign resident who will derive employment income from Country A some time in the 2010-11 income year whilst you remain a foreign resident. Therefore, it will not be assessable income in Australia under subsection 6-5(3) of the ITA 1997.
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