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Edited version of private ruling
Authorisation Number: 1011666846652
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Ruling
Question
Is your income derived from working in country X as a foreign (non) resident exempt from income tax in Australia?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commences on:
1 July 2010
Relevant facts and circumstances
You are planning to take up employment in country X with a company in that country.
Your contract with the company is for three years, with options to extend.
You will be working as a contractor employed through a labour hire company based in Australia with a back to back contractual arrangement with the company in country X.
You will be based in country X.
You will be renting a property in country X and your entire family will be relocating to country X.
Your wages will be paid into an Australian bank account in Australian dollars by the Australian based labour hire firm for your work in country X.
You state that you are a foreign resident of Australia.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(3)
Income Tax Assessment Act 1997 Subsection 6-15(2)
Reasons for decision
Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a foreign resident of Australia includes all ordinary income derived directly or indirectly from all Australian sources during the income year.
A foreign resident is a person who is not a resident of Australia.
Salary and wages are regarded as ordinary income.
Subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income.
The source of income derived from employment is generally the place where the duties or services are performed (Federal Commissioner of Taxation v. French (1957) 98 CLR 398; (1957) 11 ATD 288; (1957) 7 AITR 76).
In your case, your employment duties that are carried outside of Australia are considered to be sourced out of Australia. Therefore, the income derived in relation to such employment is not assessable under subsection 6-5(3) of the ITAA 1997 as you are a foreign resident.