| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1012464326881
Ruling
Subject: Assessability of foreign sourced income
Question and answer
Is the income that you derive from you employment in country C assessable in Australia?
No.
This ruling applies for the following periods:
Year ended 30 June 2012
Year ended 30 June 2013
The scheme commenced on
28 May 2012
Relevant facts
You are employed by an Australian organisation.
Through your Australian employment you secured an employment contract in country C with an organisation based in that country.
As a consequence of accepting the employment contract were required to relocate to country C.
You left Australia to take up your employment contract in country C.
The arrangements of the country C employment assignment are such that you have 2 employment contracts, one with an Australian organisation and one with an organisation in country C.
You receive a wage from both organisations for the employment services that are carried out in country C.
When you relocated to country C you became a non-resident of Australia for income tax purposes.
Relevant legislative provisions
Income Tax Assessment Act 1997, Section 6-5(3)
Reasons for decision
Subsection 6-5(3) of the ITAA 1997 provides that the assessable income of a foreign taxpayer includes ordinary income derived directly or indirectly from all Australian sources during the income year.
Generally, Australian courts have held that the source of employment income is where the employee performs their duties as in case Federal Commissioner of Taxation v. French (1957) 98 CLR 398; (1957) 7 AITR 76; 11 ATD 288). Employment income earned while carrying out duties in Australia is considered to be sourced in Australia.
Employment income earned while being carried out overseas is considered to be sourced in that overseas country, unless it is merely incidental to the performance of the taxpayer's duties in Australia.
In your case, as you are a foreign resident for tax purposes and your employment income is sourced from employment that is exercised in country C, the income is not assessable in Australia under section 6-5(3) of the ITAA 1997.
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).
