Private ruling: Exempt Income
Date of advice: 28 June 2018
Published: September 2018
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20YY
Date scheme commenced: Summer 20AA

Ruling: Q1: Is the income you receive while conducting academic research in Australia assessable income in Australia? | A1: No

Relevant facts and circumstances: You have been offered a fixed-term full-time appointment at an Australian University in the Faculty of Science. Your research is not primarily for the benefit of a particular person or persons. You are a national of Country A. Your contract runs from Summer 20AA to Spring 20AA. You will be in Australia for less than 2 years.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 6-15 | International Tax Agreements Act 1953 Section 4. | International Tax Agreements Act 1953 Sch28-Art20 .

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) includes in assessable income, ordinary income derived from Australian sources. Subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income. In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements. Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the ITAA 1997 so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations). Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. The Country A Agreement is listed in section 5 of the Agreements Act. The agreement for Country A is located on the Austlii website ( www.austlii.edu.au ) in the Australian Treaties Series database. The agreement operates to avoid the double taxation of income received by residents of Australia and Country A. Article A of the Agreement provides that where a professor or teacher who is a resident of Country A visits Australia for a period not exceeding two years for the purpose of carrying out research at an Australian university, any income received for the research shall be exempt from tax in Australia to the extent that it is taxable in Country A. However Article B of the agreement provides that the income received for the research is not exempt where the research is undertaken primarily for the private benefit of a specific person or persons. In your case you came to Australia and commenced your research in Summer 20AA. This research will finish in Spring 20AA. Additionally, the research you are conducting is not for the benefit of a specific person or persons as outlined in the universities policy on intellectual property. As such, you meet the requirements of Article A and Article B of the Agreement. Accordingly, the income you receive for the research undertaken is exempt from tax in Australia to the extent to which it is subject to tax in Country A. Therefore, the income you receive for research undertaken in Australia will not be assessable under section 6-5 of the ITAA 1997 Please note : If your plans change and you remain in Australia for longer than 2 years your income will be assessable in Australia.