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Edited version of private ruling
Authorisation Number: 1011616013450
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Ruling
Subject: Foreign Resident - Foreign Income
Is the income you derive from working overseas for an Australian organisation whilst you are a foreign resident for income tax purposes, assessable income in Australia?
No.
This ruling applies for the following period:
Year ending 30 June 2011.
Year ending 30 June 2012.
Year ending 30 June 2013.
The scheme commenced on:
1 July 2006.
Relevant facts:
You are a permanent resident of Country A.
You are a foreign resident of Australia for tax purposes.
You have lived in Country A for a specific period of time.
You pay tax in Country A.
You are currently on an employment contract for a specific period by a university to administer a particular program in Country A and Country B. The university is based in Australia.
Your employment commenced some time in the 2006-07 income year.
You perform, and will continue to perform all of your duties in Country A, Country B and Country C.
You receive, and will continue to receive a salary from the Australian based university.
You stated that your circumstances have not changed from a previous private ruling that was issued by the Australian Tax Office (ATO). That ruling only applied for the 2006-07, 2007-08, 2008-09 and 2009-10 income years. Hence, you have requested that this private ruling be applied for the rest of your contract period which expires some time in the 2012-13 income year.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Subsection 6-5(3)
Reasons for decision
Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that ordinary income derived by a foreign resident directly or indirectly from Australian sources, as well as other ordinary income included by a provision on a basis other than having an Australian source, is assessable.
Salary and wages are ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997.
Generally, Australian courts have held that the source of employment income is where the employee performs their duties. Thus, employment income earned while being carried out overseas is considered to be sourced in that overseas country.
In your case, you are a resident of Country A and you are employed by an Australian organisation to perform duties in Country A, Country B and Country C.
Therefore, as the source of your income is from overseas, your salary income will not be assessable in Australia.
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