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Edited version of your written advice
Authorisation Number: 1051204671766
Date of Advice: 3 April 2017
Ruling
Subject: assessability of locally engaged staff member income
Question and answer
Is the income you earn as a Locally Engaged Staff (LES) member at Country X Consulate assessable income in Australia?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
The scheme commences on:
1 July 2007
Relevant facts and circumstances
You are a citizen of Country X.
You are a tax resident of Country X.
You are a tax resident of Australia.
You moved to Australia and have resided in Australia in since 2007, becoming a permanent resident in 2010.
You were hired by the Country X Consulate in 2008 as a LES member. 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 Section 6-5(2)
Income Tax Assessment Act 1936
International Tax Agreements Act 1953
Reasons for decision
Locally Engaged Staff member income
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
Salary and wages 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 not only the income tax laws but also any applicable double tax agreement enforceable under the International Tax Agreements Act 1953 (the Agreements Act).
Section 4 of the Agreements Act incorporates that Act with the Australian ITAA 1936 and ITAA 1997 so that Acts are read as one. In the event of inconsistent provisions, the Agreements Act overrides the ITAA 1936 and ITAA 1997 except in some limited situations.
An agreement between Country X and Australia operates to avoid the double taxation of income.
An article of the agreement provides that for the purposes of this agreement a person is a resident of Australia if the person, under the law of Australia relating to Australia tax, is a resident of Australia.
In your case, you are a tax resident of Australia under the law of Australia relating to Australia tax.
Various articles in the agreement operate to make you salary assessable in both countries and to provide for Country X to allow a tax credit for the tax paid in Australia on your salary.