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Edited version of private advice
Authorisation Number: 1051673297518
Date of advice: 11 May 2020
Ruling
Subject: Assessable income
Question
Is the employment income received from the Australian employer assessable in Australia from when you left Australia permanently?
Answer
No
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
1 July 2019
Relevant facts and circumstances
You departed Australia permanently in early 20XX as your intention from that point was to live and work in Country Y. As such you are a non-resident of Australia for taxation purposes from late when you departed.
You have a spouse in Country Y who you married a couple of months prior to you departing Australia.
Your spouse is a citizen of Country X who has been living in Country Y for a number of years.
You hold a visa which allows you to reside in Country Y.
You are a resident of Country Y for taxation purposes which commenced from early 20XX.
You have been employed by an Australian employer on a casual basis for a number of years, and your contract commenced in early 20XX and ended in late 20XX.
Since living in Country Y you have conducted your employment duties with your Australian employer online from your Country Y residence.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Summary
Although your salary and wage income was being paid from an Australian employer, as you were performing the work from Country Y, the income had a foreign source.
As you were a non-resident for taxation purposes from late March 20XX, the income you derived from your employment with your Australian employer is not assessable in Australia from this date, as non-residents for taxation purposes are only assessable on Australian source income.
Detailed reasoning
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia.
However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.
The source of a taxpayer's income (derivation) is the place where the services are performed: French v. FC of T (1957) 98 CLR 398.
In your case, the income you earn while carrying out the duties of your employment with your Australian employer has a foreign source as you were physically present in Country Y when you carried out your duties.
As the income is sourced (derived) in Country Y, along with the fact that you are a non-resident of Australia for taxation purposes from XX March 20XX, the income earned from your employment with your Australian employer whilst living in Country Y is not assessable under section 6-5 of the ITAA 1997 from late March 20XX.