ATO ID 2002/447: Assessable income - Non resident taxpayer - visiting academic
Date of decision: 15 March 2002
Year of income: Year ended 30 June 2001 Year ending 30 June 2002
Business line: Small Business/Individual Taxpayers

Issue
Is the income earned by the taxpayer while in Australia as a visiting academic assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
Yes. The income earned by the taxpayer while in Australia as a visiting academic is assessable under section 6-5 of the ITAA 1997.

Facts
The taxpayer is a resident of a foreign country and is a non resident of Australia for taxation purposes. Australia does not have a double tax agreement with this foreign country. The taxpayer was employed in Australia as a visiting academic for less than 2 years.

Reasons for decision
Summary: Subsection 6-5(3) of the ITAA 1997 provides that the assessable income of a non resident taxpayer includes ordinary income derived directly or indirectly from all Australian sources during the income year. Employment income is ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997. However, subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income. Section 11-15 of the ITAA 1997 lists those provisions dealing with income which may be exempt. There are no provisions in section 11-15 of the ITAA 1997 exempting the taxpayer's income earned while in Australia. In determining liability to Australian tax on income earned by a non resident 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 . Australia has agreements with various countries to prevent the double taxation of income. In many cases these agreements provide that income is exempt from tax in the country of source if the taxpayer's visit is for teaching or research and does not exceed 2 years. However, as Australia does not have a double tax agreement with the taxpayer's country of residence no such exemption is provided. Therefore, the income that the taxpayer earned while in Australia will be included in their assessable income under subsection 6-5(3) of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 section 6-5 subsection 6-5(3) subsection 6-15(2) section 11-15
Subject references: Academic staff Double tax agreements Double tax relief Non resident individuals