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Edited version of private ruling
Authorisation Number: 1011579986101
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Ruling
Subject: Visiting Researcher
Question
Is the income you earn as a Research Fellow in Australia exempt from tax in Australia?
Answer
Yes.
This ruling applies for the following period
Year ending 2011
The scheme commenced on
1 July 2010
Relevant facts
You came to Australia on less than two year contract with an Australian university as a research Fellow.
Your contract with the university states that your fixed-term appointment does not carry any entitlement to further employment.
You will return to Country A after the completion of your one year fixed-term appointment.
Your work is not primarily undertaken for the private benefit of a specific person or persons.
You were a lecturer in a university in Country A before coming to Australia.
You stated,
§ You are a resident of Country A for income tax purposes.
§ Your family did not accompany you to Australia and are staying in Country A.
§ All your assets are in Country A.
§ The only asset you have in Australia is a bank account where your income is deposited from your research work in Australia.
Your income from Australia will be subject to tax in Country A.
Australia has a tax treaty with Country A.
The documents supplied by you form part of the scheme.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Subsection 6-5(2)
International Tax Agreements Act 1953 Section 4
International Tax Agreements Act 1953.
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (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. However, if an amount is exempt income it is not included in the assessable income of a taxpayer (section 6-15 of the ITAA 1997).
Section 4 of the International Tax Agreements Act 1953 (the Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the ITAA 1997 so that both Acts are read as one. The Agreements Act effectively overrides the ITAA 1936 and the ITAA 1997 where there are any inconsistencies (except for some limited provisions).
Schedule X to the Agreements Act contains the tax treaty between Australia and Country A (the Country A Agreement). The Country A Agreement operates to avoid the double taxation of income received by Australian and Country A residents.
An article of the Country A Agreement provides that where a professor or teacher who is a resident of Country A visits Australia for a period not exceeding two years for the purpose of carrying out research at an Australian university, any income received for the research shall be exempt from tax in Australia to the extent that it is taxable in Country A. However, remuneration which a teacher receives for conducting research where it is undertaken primarily for the private benefit of a specific person or persons is not exempt.
In your case, you are a lecturer and a resident of Country A and your appointment as a Research Fellow with an Australian university involves a research work in Australia for a period not exceeding two years. Your income from an Australian university will be subject to tax in Country A. In addition, the work undertaken in Australia is not primarily undertaken for the private benefit of a specific person or persons.
As such, you meet the requirements of an article of the Country A Agreement.
Accordingly, the income you receive will not be assessable under section 6-5 of the ITAA 1997. Therefore, the income you receive from an Australian university is exempt from tax in Australia.
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