Edited version of private advice

Authorisation Number: 1051809984784

Date of advice: 01 March 2021

Ruling

Subject: Foreign income

Question

Is the salary you receive from your foreign employer assessable in Australia?

Answer

Yes.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are a citizen of Australia.

You have been a resident of the Country Z and classified as a permanent resident.

Your spouse is also a citizen of Australia and resident of Country Z.

You have children who are citizens of Country Z and Australia.

You arrived in Australia with your family early 20XY.

Due to COVID-19 you postponed you return trip.

Your return flight was subsequently cancelled.

You and your family stayed in various forms of accommodation within Australia over the last 12 months.

You enrolled your eldest child in the local school.

You have also enrolled your youngest child in school.

You are currently employed by a Country Z company and have continued to work for them remotely while in Australia.

Relevant legislative provisions

International Tax Agreements Act 1953

Reasons for decision

Article XX of the Double Tax Agreement (DTA) with Country Z deals with dependant personal services and Article XX(X) provides that;

Subject to the provisions of Articles XX and XX, salaries, wages and other similar remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment or in respect of services performed as a director of a company shall be taxable only in that State unless the employment is exercised or the services performed in the other Contracting State. If the employment is so exercised or the services so performed, such remuneration as is derived from that exercise or performance may be taxed in that other State.

Additionally, Article XX(X) states that remuneration derived by an individual who is a resident of one of the Contracting States in respect of an employment exercised in the other Contracting State or in respect of services performed in the other Contracting State as a director of a company shall be taxable only in the first-mentioned State if:

(a)  the recipient is present in that other State for a period or periods not exceeding in the aggregate 183 days in the taxable year or year of income of that other State;

(b)  the remuneration is paid by, or on behalf of, an employer or company who is not a resident of that other State; and

(c)   the remuneration is not deductible in determining taxable profits of a permanent establishment, a fixed base or a trade or business which the employer or company has in that other State.

In your case, the salary you receive relates to your employment, which is currently exercised in the other Contracting State, being Australia, during a period in which you have been present for over 183 days in aggregate.

Consequently, as you meet the specific circumstances set out in Article XX of the DTA your salary is assessable in Australia.