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Edited version of your private ruling
Authorisation Number: 1012558153121
Ruling
Subject: Residency
Question
Is the income you earned from an internet business while you were a non-resident assessable?
Answer
No
This ruling applies for the following period(s)
Year ended 30 June 2011
Year ended 30 June 2012
The scheme commences on
1 July 2010
Relevant facts and circumstances
You are a non-resident of Australia for certain income years.
You moved to Country X and lived there for a number of years.
In Country X you were self-employed and earned income from a website business you operate which is an online member-based directory for Australian subscribers. Payments made for the advertising features on your website are paid by Australian members who pay into your Australian bank account and paypal account.
You returned to Australia recently.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1936 Subsection 6(1)
Income Tax Assessment Act 1997 Subsection 995-1(1)
Reasons for decision
Generally speaking, Australia has jurisdiction to tax individuals where they are either a resident of Australia for tax purposes, or where the relevant income has an Australian source.
Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that income derived by a non-resident directly or indirectly from Australian sources, is assessable in Australia.
The source of a taxpayer's income is the place where the services are performed (French v. FC of T (1957) 98 CLR 398).
You were a non-resident of Australia in the certain income years and in a self-employed internet business providing a service via the internet in Country X.
As you were a non resident of Australia for the certain income years and the source of your income was in Country X during those years, irrespective of whether your customers were in Australia and/or if they were paying into your Australian bank account/Paypal account, the income you earned from your internet business during this period is not assessable in Australia.
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