Edited version of private advice

Authorisation Number: 1051761822287

Date of advice: 19 November 2020

Ruling

Subject: Assessable income

Question

Is your salary assessable in Australia?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You arrived in Australia in early 20XX as service staff for the Country Z embassy.

You have been working for the Country Z embassy since 20XX.

You entered Australia on a work-related visa and you remained in Australia on that visa until late 20XX.

You were married in 20XX and applied for a permanent visa.

You were granted a temporary visa while the permanent visa was being processed.

The temporary visa became active late 20XX after your work-related visa expired.

You are a resident for tax purposes and intend on residing in Australia with your spouse and child.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

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.

Section 995-1 of the ITAA 1997 defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936).

In determining liability to Australian income tax on income derived by consular officers, staff, and members of their families, it is necessary to consider not only the domestic tax laws but also the Relevant Act.

Article XX of the Convention makes reference to the exemption from income tax for all consular officers, employees, and members of their families forming part of their households, but with the exception of tax on 'private income' having its source in Australia.

Specifically, it states under Article XX that members of the service staff shall be exempt from dues and taxes on the wages which they receive for their services.

In your case, you became resident of Australia for taxation purposes from the day your Temporary Visa became active and therefore you are required to declare your world-wide income, including income received from foreign sources, in your Australian tax return in accordance with section 6-5 of the ITAA 1997.

Prior to this period, you were in Australia on a work-related visa therefore you were exempt from tax on your wages in accordance with the CPIA.

Once you acquired the bridging visa you were no longer in Australia on a work-related visa and are no longer exempt from tax on your income.