ATO Interpretative Decision
ATO ID 2001/252
Income Tax
Exempt income: tax treatment of research income received by visiting Chinese lecturerFOI status: may be released
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This ATO ID contains references to repealed provisions, some of which may have been re-enacted or remade. The ATO ID is current in relation to the re-enacted or remade provisions.
Australia's tax treaties and other agreements except for the Taipei Agreement are set out in the Australian Treaty Series. The citation for each is in a note to the applicable defined term in sections 3AAA or 3AAB of the International Tax Agreements Act 1953.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is income received for research conducted in Australia by a visiting Chinese lecturer for less than two years, assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. The Chinese lecturer's research income will not be assessable in Australia as it is exempt from Australian tax under Article 20 of Schedule 28 of the International Tax Agreements Act 1953, to the extent to which it is subject to tax in China.
Facts
A university lecturer from China is conducting full time paid research in an Australian university for no more than two years. The research is not for the private benefit of a specific person or persons. The remuneration is paid by the Australian university.
Reasons for Decision
Section 6-5 of the ITAA 1997 includes in assessable income, ordinary income derived from all Australian sources. However, agreements that Australia has with various countries under the International Tax Agreements Act 1953 operate to prevent the double taxation of income.
Section 4 of the International Tax Agreements Act 1953 incorporates that Act with the ITAA 1997 so that both Acts are read as one. The International Tax Agreements Act 1953 effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited provisions).
Article 20 of Schedule 28 of the International Tax Agreements Act 1953 provides that where a professor or teacher who is a resident of China, visits Australia for a period not exceeding two years for the purpose of conducting research at an Australian university, any remuneration the person receives for such research shall be exempt from tax in Australia to the extent to which the remuneration is subject to tax in China. However, remuneration which a professor or teacher receives for conducting research where it is undertaken primarily for the private benefit of a specific person or persons is not exempt.
The Chinese lecturer meets the conditions of Article 20 of Schedule 28 of the International Tax Agreements Act 1953. The income the lecturer receives for research undertaken is therefore exempt from tax in Australia to the extent to which it is subject to tax in China.
Date of decision: 25 May 2001
Legislative References:
Income Tax Assessment Act 1997
section 6-5
section 4
Schedule 28, article 20
Keywords
Double tax agreements
Double tax relief
Resident/residency
China
Exempt income
Academic staff
Non resident individuals
ISSN: 1445-2782