Private ruling: Assessability of foreign income
Published: February 2015
Ruling period: 1 July 2014 to 30 June 2018.
Date scheme commenced: 1 July 2014.

Ruling: Question and answer: | Is the income you earn from employment with a foreign airline assessable in Australia? | No.

Relevant facts and circumstances: You have a four year contract to work with a foreign airline. The foreign airline is based in a Country A. You pay tax in Country A from your income from the foreign airline. You are employed on international flights only.

Relevant legislative provisions: International Tax Agreements Act 1953 Sections 4 and 5

Reasons for decision: Summary: Australia and Country A are parties to a double tax agreement (the DTA) The DTA is listed in section 5 of the International Tax Agreements Act 1953 (Agreements Act) and consequently has the force of law, subject to the provisions of the Agreements Act. One of the aims of the DTA is to prevent double taxation of individuals who may, but for the agreement, have a taxation liability in both countries for the same reason. Article 15 of the DTA deals with the taxing rights of remuneration (such as salary and wages) and states, in paragraph 3: … remuneration derived in respect of an employment exercised aboard a ship or aircraft operated by an enterprise of a Contracting State in international traffic, shall be taxable only in the Contracting State of which the enterprise is a resident. You are employed on international flights by an entity based in Country A. Accordingly, and considering the provisions of paragraph 3 of Article 15 of the DTA, the income you earn from that employment will be taxable only in Country A and will not be included in your assessable income in Australia.