Private ruling: Residency and assessability of income
Date of advice: 2 September 2015
Published: September 2015
Ruling period: 1 July 20XX to 30 June 20YY.
Date scheme commenced: 1 July 20XX.

Ruling: Question and answer: | Is the salary/wages from your overseas employment included in your assessable income in Australia? | No.

Relevant facts and circumstances: You were born in Australia. You are an Australian citizen. You have no spouse and no children. You were seconded by your Australian employer to work overseas. You were a resident of Australia for taxation purposes before you left to go overseas. While on secondment overseas: • You lived in the same location in a rented apartment. • Your salary/wages were paid by your Australia employer. • You returned to Australia twice a year for short visits. • You had a bank account and superannuation in Australia. • You had no investments overseas. • You were a member of a professional association and a gym overseas. • The majority of your personal belongings were overseas. • You did not pay tax overseas. You have never owned real estate in Australia or elsewhere. You were not in Australia for more than 183 days in any of the relevant financial years. You are not a contributing member of any superannuation fund for Commonwealth government employees. Before leaving Australia to take up the secondment you lived with relatives and you stayed with them each time you returned to Australia during your secondment.

Relevant legislative provisions: Income Tax Assessment Act 1997 - Section 6-5. | Income Tax Assessment Act 1997 Section 995-1(1). | Income Tax Assessment Act 1936 Section 6(1).

Reasons for decision: Detailed Reasoning - Assessability of salary/wages - general: Under the provisions of section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) an individual who is a resident of Australia for taxation purposes is assessable on all their ordinary income, from all sources in or out of Australia. Conversely, individual's who are non-residents are generally only assessable on amounts of ordinary income from Australian sources. The salary/wages you received from your employment overseas was ordinary income for the purpose of section 6-5 of the ITAA 1997. | Detailed Reasoning - Source of remuneration: It is generally accepted that the 'source' of income from working is the location the employment is carried out. The 'source' of the salary/wages you were paid for the relevant years is considered to be outside Australia because that is where you carried out the work overseas. | Detailed Reasoning - Residency for taxation purposes: Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936). The terms 'resident' and 'resident of Australia', in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are: • the resides test, • the domicile test, • the 183 day test, and • the superannuation test. If any one of these tests is met, an individual will be a resident of Australia for taxation purposes. Based on the facts you have provided, we can conclude that you did not satisfy any of the tests of residency during the relevant period and were a non-resident of Australia for taxation purposes during that time. | Detailed Reasoning - Conclusion: The salary/wages you received from your employment overseas during the relevant years is not assessable in Australia based on the fact that you were a non-resident of Australia during that period and the salary/wages did not have an Australian source.