Private ruling: Assessability of foreign income
Published: July 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Question and answer | Is the payment you received for services rendered prior to migration to Australia assessable income in Australia? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. While residing overseas you provided services to an entity. You agreed with the management of the entity to be remunerated in the form of a one-time lump sum bonus payment to be paid at a later date. You became an Australian resident for tax purposes in 20XX. You have now received the payment as agreed with the entity.

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

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that if you are an Australian resident, your assessable income includes the ordinary income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Subsection 6-5(4) of the ITAA 1997 also provides that in working out whether you have derived an amount of ordinary income, and (if so) when you derived it, you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct. As you are an Australian resident for tax purposes, you are taxed on your worldwide income, so you must declare any foreign income as well as Australian-source income on your tax return. Unless specifically exempted, all employment-related income, allowances, payments and other benefits must be declared on your tax return. In your situation, as you are a permanent resident of Australia for tax purposes, all income received during the financial year must be reported as income in your income tax return. Therefore, you must include the income you received from the entity in your relevant income tax return.