| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012427948321
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Foreign salary and work related expenses
Questions and answers:
Is the foreign salary you earned taxable in Australia?
No.
Are you entitled to claim travel and other expenses related to your overseas employment?
No.
This ruling applies for the following periods
Year ended 30 June 2012
Year ending 30 June 2013
The scheme commenced on
1 July 2011
Relevant facts and circumstances
You are an Australian resident for taxation purposes.
You worked for a government authority in country X for 12 months.
You paid tax on your salary in country X.
You resigned from your employment in Australia prior to commencing work overseas.
You received a termination payment from your Australian employer after you resigned.
You returned to Australia after completing your employment overseas.
You incurred airline travel expenses and other expenses prior to commencing, and after finishing, your employment in country X.
Australia has a double taxation agreement with country X.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
International Tax Agreements Act 1953
Reasons for decision
Foreign salary income
In determining whether foreign sourced income is taxable in Australia, it is relevant to consider not only the income tax laws but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (the Agreements Act).
The Agreements Act contains the double tax agreement between Australia and country X (the agreement). The Agreement operates to avoid the double taxation of income derived by Australian and country X residents.
The Agreement states that salaries and wages earned in relation to performing governmental functions in country X will be taxable only in country X.
In your situation, you worked in for a government authority in country X. Therefore, the salary you earned is taxable only in country X.
The salary you earned and the tax you paid in country X in the years ending 30 June 20YY and 30 June 20ZZ does not have to be included in your Australian income tax returns for those years
Work related expenses
Income tax legislation allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing income that is assessable (taxable) in Australia, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.
Travel expenses are deductible if they are incurred in the course of your work or business. In considering the deductibility of travel expenses a distinction is made between travel to work and travel on work. It is only if the duties of the job require a taxpayer to travel in the course of undertaking their work duties that the taxpayer's expenses can be deducted.
A deduction is generally not allowable for the cost of travel by an employee between home and their normal workplace as it is considered to be a private expense. The cost of this travel is incurred to put you in a position to perform your duties of employment, rather than in the performance of those duties.
In your situation, you travelled to country X to work for 12 months then returned to Australia. The travel between Australia and country X is considered simply travelling to and from work and a private expense. Any other expenses you incurred are also private in nature.
Furthermore, work related expenses can only be deducted where they are incurred in producing income that is taxable in Australia. However, the salary you earned in country X is not taxable in Australia.
Therefore, you are not entitled to a deduction for these expenses.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
