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Edited version of private ruling
Authorisation Number: 1011686799894
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Ruling
Subject: Assessability of postdoctoral fellowship income
Question:
Is the income you receive while conducting academic research in Australia assessable income in Australia?
Answer: No.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on:
1 July 2010
Relevant facts
You are a research associate at a university in Australia.
You are based overseas.
Your contract is for approximately 12 months.
You intend to leave as soon as your contract ends.
You will be in Australia less than 2 years.
Relevant legislative provisions
Income tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 6-15
International Tax Agreements Act 1953 Section 4.
Reasons for decision
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) includes in assessable income, ordinary income derived from Australian sources.
Subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income.
Section 4 of the International Tax Agreements Act 1953 (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 xx to the Agreements Act contains the tax treaty between Australia and Country A .The Country A Agreement operates to avoid the double taxation of income received by Australian and Country A residents.
Article xx (1) of the Country A Agreement provides that where a professional 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 Article xx of the country A agreement provides that the income received for the research is not exempt where the research is undertaken primarily for the private benefit of a specific person or persons.
In your case you came from Country A to Australia in the 2010-11 income year. You are based overseas.
You are currently working at a university in Australia conducting research. Your income from the university will be taxed in Country A. Additionally, the research you are conducting is not for the benefit of a specific person or persons.
As such, you meet the requirements of Article xx and Article xx of the country A Agreement. Accordingly, the income you receive for the research undertaken is exempt from tax in Australia to the extent to which it is subject to tax in Country A.
Therefore, the income you receive for research undertaken in Australia will not be assessable under section 6-5 of the ITAA 1997
Please note:
if your plans change and you remain in Australia for longer than 2 years your income will be assessable in Australia.
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