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Edited version of your written advice
Authorisation Number: 1012872344957
Date of advice: 4 September 2015
Ruling
Subject: Income Tax International Pilot
Question and Answer
Is the income from your employment as a pilot in a foreign country assessable in Australia?
No.
This ruling applies for the following periods:
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
Year ending 30 June 2019
The scheme commences on:
1 July 2010
Relevant facts and circumstances
You are employed by a foreign company as a pilot.
This company is an enterprise domiciled in a foreign country.
You fly on international routes.
You pay income tax in a foreign country and remit this in your Australian income tax return as foreign income with attached foreign tax credits
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
International Tax Agreements Act 1953 Section 5
Income Tax Assessment Act 1936
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements.
Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the ITAA 1997 so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations).
Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. The Agreement is listed in section 5 of the Agreements Act.
The Agreement is located on the Austlii website (www.austlii.edu.au) in the Australian Treaties Series database. The Agreement operates to avoid the double taxation of income received by residents of Australia and the foreign country.
The Agreement states at Article x that this income is only taxed in the foreign country.
Therefore income is not assessable in Australia under section Subsection 6(2) of the ITAA 1997.