Private ruling: Foreign employment income
Published: October 2013
Ruling period: Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2008

Ruling: Question and answer: | Is your foreign employment income assessable in Australia? | No.

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. You are employed by an enterprise of country X that is domiciled in country X. Your employment is exercised in an international field. You pay income tax in country X on your employment income.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | International Tax Agreements Act 1953

Reasons for decision: Summary: Section 6-5 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. 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 Agreement with country X is listed in section 5 of the Agreements Act. The country X Agreement 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 X. An article of the country X Agreement specifies that remuneration derived in respect of employment exercised in international traffic for an enterprise of either country X or Australia, will be taxable only in the country of which the enterprise is a resident. In your case, your employment is exercised in an international field for an enterprise of country X which is a resident of country X. Therefore, your country X employment income is taxable only in country X and is not assessable income for Australian income tax purposes.