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Edited version of your private ruling
Authorisation Number: 1011959692357
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Ruling
Subject: Foreign resident - Australian income
Question 1
As a foreign resident, is your Australian employment income taxable in Australia?
Answer
Yes.
Question 2
Can the Australian company claim the cost of paying for repairs and maintenance (non-capital nature) as tax deduction?
Answer
Invalid ruling. Since the original request for a private ruling involves a tax deduction for an unrelated company, we are not able to issue a ruling.
This ruling applies for the following periods:
Year ending 30 June 2012
The scheme commences on:
1 July 2011
Relevant facts and circumstances
You are considering leaving Australia to Country X. You will be purchasing a residential property in Country X and eventually become a permanent Country X citizen with your spouse.
You are considering yourself to be a non resident for income tax purposes.
You are considering working for a company, either Australian or Country X, in Australia for short periods of time from 2 weeks to 4 weeks at a time, no more than a total of 20 weeks in any one year.
While working in Australia, you will be living in a temporary accommodation (hotel, motel, or workstation) provided to you by your employer.
Your spouse will be a resident of Country X and she will not be accompanying you to Australia for work purposes.
You will retain investments in Australia. Your investments are in the form of rental properties. You manage your rental properties from Country X via your real estate agents.
You will retain a self managed superannuation fund which you will be managing from Country X too.
You wrote to the Australian Taxation Office for a private binding ruling on what is your taxation obligation as a non resident in relation to your services working in Australia for a short period of time.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5(3)
Taxation Administration Act 1953 Section Sch1-359-5
Reasons for decision
Question 1
Section 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 the 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.
The source of income derived from employment is generally the place where the duties or services are performed (Federal Commissioner of Taxation v. French (1958) 98 CLR 398; (1957) 11 ATD 288; (1957) 7 AITR 76).
Your employment duties carried in Australia are considered to be sourced in Australia.
There is no tax treaty between Australia and Country X.
Therefore the income derived in relation to your employment is assessable in Australia under subsection 6-5(3) of the ITAA 1997.
Question 2
A private ruling is a written expression of the Commissioner's opinion of the way in which a relevant provision applies or would apply to the entity whose tax affairs are the subject of the ruling, in relation to the specified scheme (section 359-5 of schedule 1 to the Taxation Administration Act 1953).
A deduction is any losses or outgoing that is incurred in gaining or producing assessable income or it is necessary to be incurred in carry on a business for the purpose of gaining or producing assessable income.
Your request is in relation to a tax deduction in relation to an unrelated company's expense.
As the matter directly relates to the taxation obligations under ITAA 1997 of unrelated Australian company, you are unable to request a ruling on this matter
However, the company in your ruling request may apply for a private ruling in relation to the matter.