Private ruling: Foreign source income assessability
Date of advice: 14 March 2019
Published: May 2019
Ruling period: Year ended 30 June 2017 | Year ended 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021 | Year ending 30 June 2022
Date scheme commenced: 1 July 2016

Ruling: Q1: Is the income you will derive from your employment with an enterprise based in Country B be assessable in Australia? | A1: No. The Agreement between the Government of Australia and Country B is listed in section 5 of the Agreements Act. The agreement operates to avoid the double taxation of income received by residents of Australia and Country B. Article 15(3) of the agreement states that 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. As you are employed by an enterprise based in Country B the income will be taxable only in Country B and will not be assessable in Australia under section subsection 6(2) of the Income Tax Assessment Act 1997 (ITAA 1997) and sections 4 and 5 of the International Tax Agreements Act 1953 .

Relevant facts and circumstances: You are a resident of Australia for tax purposes. You are currently employed with a company in Country B and you are based in Australia. The original employment contract commenced on xx xxxx 20XX and was varied on xx xxxx 20YY. The contract ends on xx xxxx 20ZZ. The company is a resident enterprise of Country B. You intend that your main residence will remain in Australia. You will pay tax in Country B on the employment income from the company and they will provide you with a tax paid certificate.

Relevant legislative provisions: Income Tax Assessment Act 1936; | Income Tax Assessment Act 1997 subsection 6-5(2); and | International Tax Agreements Act 1953 sections 4 and 5.