Private ruling: Assessable income
Date of advice: 11 May 2020
Published: June 2020
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 2019

Ruling: Q1: Is the employment income received from the Australian employer assessable in Australia from when you left Australia permanently? | A1: No

Relevant facts and circumstances: You departed Australia permanently in early 20XX as your intention from that point was to live and work in Country Y. As such you are a non-resident of Australia for taxation purposes from late when you departed. You have a spouse in Country Y who you married a couple of months prior to you departing Australia. Your spouse is a citizen of Country X who has been living in Country Y for a number of years. You hold a visa which allows you to reside in Country Y. You are a resident of Country Y for taxation purposes which commenced from early 20XX. You have been employed by an Australian employer on a casual basis for a number of years, and your contract commenced in early 20XX and ended in late 20XX. Since living in Country Y you have conducted your employment duties with your Australian employer online from your Country Y residence.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5

Reasons for decision: Summary: Although your salary and wage income was being paid from an Australian employer, as you were performing the work from Country Y, the income had a foreign source. As you were a non-resident for taxation purposes from late March 20XX, the income you derived from your employment with your Australian employer is not assessable in Australia from this date, as non-residents for taxation purposes are only assessable on Australian source income. | Detailed Reasoning - Detailed reasoning: 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. 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 earn while carrying out the duties of your employment with your Australian employer has a foreign source as you were physically present in Country Y when you carried out your duties. As the income is sourced (derived) in Country Y, along with the fact that you are a non-resident of Australia for taxation purposes from XX March 20XX, the income earned from your employment with your Australian employer whilst living in Country Y is not assessable under section 6-5 of the ITAA 1997 from late March 20XX.