Edited version of private advice

Authorisation Number: 1052363659265

Date of advice: 20 February 2025

Ruling

Subject: Income - source of employment income

Question 1

Is the salary you receive from your Australian employer assessable in Australia if you are a foreign resident employed overseas?

Answer 1

No

Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a foreign resident taxpayer includes the ordinary income derived directly or indirectly from all Australian sources, and ordinary income that a provision includes in your assessable income for the income year on some basis other than having an Australian source.

The source of employment income always depends on the facts. Usually, the place where the employment is exercised is very significant when deciding the source of employment income. However, in certain circumstances other factors may be more significant.

Cases concerning the provision of personal services are usually decided by weighing up the outcomes of the consideration of the following three factors (with the weighting given to each determined by their relevance to the case):

•                     the place where the contract of employment is entered into;

•                     the place where remuneration is payable; and

•                     the place where the services are performed (including the place where the work is given effect to and where the outcome of the work occurs).

In your case, your employment income does not have an Australian source as you are required to be physically present in country A to carry out your work, and country A is the place where your work is given effect to.

Therefore, as you are a foreign resident from XX XXXX 20XX, your foreign sourced salary is not assessable in Australia.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

XX XXXX 20XX

Relevant facts and circumstances

In XXXX 20XX, you commenced employment with employer A.

You work as a pilot.

From XXXX 20XX, you no longer provide any services in Australia and started to provide your services in country A.

You perform missions and search and rescue missions in country A.

You are also training in country A.

On XX XXXX 20XX, you permanently moved to country A.

When you departed Australia permanently, you became a foreign resident of Australia for tax purposes.

You have stated it is your intention to not return to Australia for a couple years.

Employer A withholds tax in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 6-5(3)