Private ruling: Assessable income - foreign source
Date of advice: 18 July 2017
Published: November 2017
Ruling period: Year ended 30 June 20CC
Date scheme commenced: 1 July 20BB

Ruling: Question and answer | Is the income you earned whilst carrying out the duties of your work for an Australian company whilst living in the Country A assessable in Australia? | No

Relevant facts and circumstances: You and your family were residing in Country A from 20AA to 20DD. You were a non-resident of Australia for taxation purposes during this time. In mid 20BB you performed work for an Australian employer whilst you were living in Country A. You incurred travel expenses that were directly related to this employment which were incurred in mid 20BB. Our records indicate that you were overseas for the entire period of the employment. The nature of the work meant that you were able to complete relevant research and write reports, which you sent to your Australian employer whilst you were living in Country A. Your income was received in mid 20BB.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2)

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. The source of a taxpayer's income (derivation) is the place where the services are performed: French v. FC of T (1957) 98 CLR 398. In your case, the income you earned while carrying out the duties of your employment with an Australian employer has a Country A source as you were physically present in Country A when you carried out your duties. As the income is sourced (derived) in Country A, along with the fact that you were not an Australian resident for taxation purposes at the time you derived the income, the income earned from your employment with the Australian employer whilst living in Country A is not assessable under section 6-5 of the ITAA 1997.