Edited version of private advice

Authorisation Number: 1052233395050

Date of advice: 26 March 2024

Ruling

Subject: Assessable income

Question

Is the employment remuneration you receive from your employer assessable as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No. The employment income received is assessable in Country A according to the convention between Country B and Country A for the avoidance of double taxation with respect to taxes on income and fringe benefits and the prevention of fiscal evasion.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

You live in Country A and are a Country A citizen,

In 20XX you accepted permanent employment with X (your employer) in Country B.

You completed the required tax forms and marked yourself as a non-resident.

Since that time, you have been paid fortnightly as per your written agreement into an Australian bank account and tax has been deducted by your employer.

You have remained physically in Country A and work remotely for your Country B employer.

Each shift you sign in electronically to the internal computer network.

Your duties include having virtual meetings with members of your team, all of whom are physically located in Country B.

Your work primarily involves seeing Country B patients who have registered to be seen in their homes.

Each aspect of the service you provide is in Country B.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Reasons for decision

In determining your liability to pay tax in Country B it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements.

In the convention between Country B and Country A for the avoidance of double taxation Article 14 (relating to income from employment) it states:

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State (Country A) in respect of an employment shall be taxable only in that State (Country A) unless the employment is exercised in the other Contracting State (Country B). If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State (Country B).

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State (Country A) in respect of an employment exercised in the other Contracting State (Country B) shall be taxable only in the first-mentioned State (Country A) if:

a)    the recipient is present in the other State (Country B) for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the year of income of that other State (Country B), and

b)    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State (Country B), or is borne by or deductible in determining the profits attributable to a permanent establishment which the employer has in the first-mentioned State (Country A), and

c)    the remuneration is neither borne by nor deductible in determining the profits attributable to a permanent establishment which the employer has in the other State (Country B).

When applying this article to your circumstances we have determined you are a resident of Country A exercising your employment in Country A. The convention doesn't define 'exercised' therefore it takes on its regular meaning. We acknowledge your patients and colleagues/team are in Country B however you are physically present and actively performing your duties in Country A therefore your employment is exercised in Country A. In respect to any employment renumeration you receive from your employer it is taxable solely in Country A.