Private ruling: Exempt Employment Income
Date of advice: 9 March 2016
Published: May 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2015

Ruling: Q1: Is salary paid to you while employed in Australian schools exempt from income tax in Australia? | A1: Yes

Relevant facts and circumstances: You are a resident of a foreign country. You were qualified to be employed as a teacher prior to coming to Australia. You arrived in Australia in 20XX. You are employed to work as a teacher for less than 2 years. You will stay in Australia for a period less than 2 years.

Relevant legislative provisions: Taxation Administration Act 1953 Subsection 12-1(1) of Schedule 1 Agreement between the Commonwealth of Australia and the Foreign Country for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital and to certain other Taxes

Reasons for decision: Summary: Article 19(1) of the Agreement between the Commonwealth of Australia and the Foreign Country for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital and to certain other Taxes states that remuneration paid to a resident of the foreign country who visiting Australia for a period not exceeding 2 years for the purpose of teaching in an Australian school should not be taxed in Australia. To obtain the visiting teacher exemption from Australian income tax, the teacher must satisfy the following requirements: • be a teacher in the foreign country or has recently qualified to be employed as a teacher prior to coming to Australia; • be a resident of the foreign country; • visit Australia for a period not exceeding 2 years; • the purpose of the visit is teaching at a university, college school or other educational institution; and • the remuneration received must be for the teaching activities. In your case, you were qualified to be employed as a teacher prior to coming to Australia; you are employed to work as a teacher for less than 2 years; you will stay in Australia for less than 2 years. As a result, the salary paid to you from your employer is exempt from income tax in Australia. Subsection 12-1(1) of Schedule to the Taxation Administration Act 1953 (TAA 1953) states that there is no requirement to withhold an amount from a payment if the whole of the payment is exempt income of the entity receiving the payment. Therefore, your employer does not need to withhold tax from your salary.