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Edited version of your written advice
Authorisation Number: 1051270321577
Date of advice: 07 September 2017
Ruling
Subject: Locally Engaged Staff (LES) member income
Question and answer
Is income earned as a locally engaged staff member at the Country X Consulate assessable in Australia?
No
This ruling applies for the following periods:
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commences on:
1 July 2015
Relevant facts and circumstances
You were hired by Country X Consulate General i as a locally engaged staff (LES) member
You are a LES working at the Country X Consulate General performing governmental functions in Australia within the meaning of Article Z of the Double Tax Convention between Australia and Country X.
You are a citizen of Country X.
You are a citizen of Australia.
You are a resident of Australia for taxation purposes.
You are not a resident of Country X for taxation purposes.
You moved to Australia and have resided in Australia before your employment
You became an Australian citizen.
You are not a diplomat or a Foreign Service officer.
You maintain your permanent home in Australia.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 6-5(2)
Income Tax Assessment Act 1936
International Tax Agreements Act 1953
International Organizations (Privileges and Immunities) Act 1963
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA) provides that assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. Salary and allowances are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.
In determining liability to Australian tax on foreign sourced income received by an Australian resident, it is necessary to consider tax laws and any applicable double tax agreement enforceable under the International Tax Agreements Act 1953 (Agreements Act).
Section 4 of the Agreements Act incorporates that Act with the Income Tax Assessment Act 1936 (TAA) and ITAA 1997 so all the Acts are read as one. In the event of inconsistent provisions, the Agreements Act overrides the TAA 1936 and ITAA 1997 except in some limited circumstances.
The Double Tax Agreement operates to avoid the double taxation of income.
Various articles of the Double Tax Agreement operate to exempt income you earn as an LES member of Country X from tax in Australia.
Double taxation
In your case there is no double taxation as income you receive as a LES member of Country X Consulate is not taxable or reportable in the Australia.
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