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Edited version of your written advice
Authorisation Number: 1051332048617
Date of advice: 30 January 2018
Ruling
Subject: Assessability of income
Question 1
Will your part-time and temporary specialist contract work in Australia be assessable in Australia?
Answer:
No.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are a non-resident specialist in your field of occupation.
Registered specialists make up only a small number in Australasia and, in your home country the number of practising specialists is currently low.
You owned your non-resident specialist company for over 10 years and you recently sold this business.
Since selling you have set up a non-resident company from which you provide educational/training services to multiple businesses in your home country.
A company in Australia have requested your specialist services for a short time.
You do not have a permanent establishment in Australia and you are operating as a part-time and temporary specialist contractor from your home country.
Whilst with the Australian company:
● You will be paying for your own airfares, accommodation and living expenses.
● You will be providing to the Australian company, where necessary, your own specialist surgical gear. You own some specialist gear for when you are working for different clients. However, inherent to specialist surgery and it unpredictability, some generic and large equipment (for example X-ray machines, theatre tables, theatre lights, power tools, large stock items) are owned by the practice from which you are working at the time. For some of the more expensive equipment (for example magnetic resonance imaging) outside specialist providers will be utilised.
● You will be invoicing the Australian company through your business as you would for any client based in your home country.
● You will be paying for your own professional insurance and certification to enable you to practise as a specialist in Australia. You will bear the legal responsibility and expense for the rectification or remedy in the case of unsatisfactory performance.
● You will be specifying to the Australian company your available hours of work.
● You will have full autonomy for cases referred to the Australian company.
● You will be entitled to delegate or subcontract, with or without the approval or consent of the Australian company.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Convention between Australia and your home country for the avoidance of double taxation with respect to taxes on income and fringe benefits and the prevention of fiscal evasion
Reasons for Decision
The Australian approach to the taxation of foreign residents is to apply control on the basis of the source of income. Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) explains that if you are a foreign resident your assessable income includes the ordinary income you derive from all Australian sources throughout the income year.
Revenue from the sale of goods and services is ordinary income under section 6-5 of the ITAA 1997.
However, exemptions from Australian tax may arise under domestic law or under a double tax agreement (DTA). Therefore, when determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable DTAs.
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).
As you are aware, Australia has an agreement with your home country. The agreement explains that the profits of an enterprise based in your home country shall be taxable only in your home country unless the enterprise carries on business in Australia through a permanent establishment situated therein. If the enterprise carries on business as mentioned, the profits of the enterprise may be taxed in Australia but only so much of them as is attributable to that permanent establishment.
Hence, the income you earn while temporarily working in Australia will be exempt from tax Australia. The payer will therefore have no obligation to withhold any tax from the payments made to you.