ATO ID 2004/908: Assessability of employment income received by a dual resident of Australia and Singapore working in Australia for more than 183 days
Date of decision: 5 November 2004
Year of income: Year ended 30 June 2004
Business line: Public Groups and International

Issue
Is the employment income of a dual resident of Australia and Singapore assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997), where the taxpayer is working in Australia for more than 183 days?

Decision
Yes. The employment income of a dual resident of Australia and Singapore is assessable under subsection 6-5(2) of the ITAA 1997 where the taxpayer is working in Australia for more than 183 days.

Facts
The taxpayer is a resident of Australia for income tax purposes. The taxpayer is a citizen of Singapore and is also a resident of Singapore for the purposes of Singaporean tax. The taxpayer is employed by an Information Technology (IT) company resident in Singapore. The taxpayer receives salary and wages income from their employer to consult on a software development project in Australia for a related Australian company. The taxpayer does not derive any income in Australia through a permanent establishment (PE). The taxpayer owns a home in Singapore but does not own a home in Australia. The taxpayer is present within Australia for a period of more than 183 days. The taxpayer pays tax on the salary and wages income in Singapore.

Reasons for decision
Summary: Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident taxpayer includes ordinary income derived directly and indirectly from all sources, whether in or out of Australia, during the income year. Salary and wages are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997. In determining liability to tax of Australian sourced income received by the taxpayer, it is necessary to consider not only the income tax laws but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (the Agreements Act). Section 4 of the Agreements Act incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except for some limited provisions). Schedule 5 to the Agreements Act contains the double tax agreement between Australia and the Republic of Singapore (the Singapore Agreement). Schedule 5A to the Agreements Act contains the protocol amending the Singapore Agreement (the Singapore Protocol). The Singapore Agreement and Singapore Protocol operate to avoid the double taxation of income received by Australian and Singapore residents. Article 3(2) of the Singapore Agreement provides the rules where an individual is a resident of Australia and Singapore for tax purposes (the 'tie breaker tests'). The tie breaker tests ensure that the individual is only treated as a resident of one country for the purposes of applying the Singapore Agreement. Article 3(2)(a)(i) provides that an individual shall be treated solely as a Singapore resident if they have a permanent home available to them in Singapore and has not a permanent home available to them in Australia. As the taxpayer has a permanent home in Singapore and not in Australia, the taxpayer is considered to be a resident of Singapore under the Singapore Agreement. Subject to Article 12, Article 11(1) of the Singapore Agreement provides that remuneration or other income derived by an individual who is a resident of Singapore in respect of personal (including professional) services shall be taxable in Singapore unless the services are performed or exercised in Australia. If the services are performed or exercised in Australia, the income may be taxed in Australia. Article 12 of the Singapore Agreement provides that remuneration or other income derived by an individual who is a resident of Singapore in respect of personal (including professional) services performed in Australia shall be exempt from tax in Australia if all of the following three conditions are met: Article 12 of the Singapore Agreement does not apply to exempt the income because the taxpayer is present in Australia for a period that exceeds 183 days. Article 18(5) of the Singapore Agreement provides that, subject to the provisions of the laws of Singapore, a credit for any tax payable in Australia will be allowed against Singapore tax payable on income derived from sources in Australia.

Legislative references: Income Tax Assessment Act 1936 the Act
Related ATO interpretative decisions: ATO ID 2003/679
Subject references: Double tax agreements Singapore International tax