Private ruling: assessability of locally engaged staff member income
Published: August 2017
Ruling period: Year ended 30 June 2008 | Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2007

Ruling: Question and answer | Is the income you earn as a Locally Engaged Staff (LES) member at Country X Consulate assessable income in Australia? | Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5(2) | Income Tax Assessment Act 1936 | International Tax Agreements Act 1953

Reasons for decision: Detailed Reasoning - Locally Engaged Staff member income: Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. Salary and wages are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997. In determining liability to Australian tax on foreign sourced income received by an Australian resident, it is necessary to consider not only the income tax laws but also any applicable double tax agreement enforceable under the International Tax Agreements Act 1953 (the Agreements Act). Section 4 of the Agreements Act incorporates that Act with the Australian ITAA 1936 and ITAA 1997 so that Acts are read as one. In the event of inconsistent provisions, the Agreements Act overrides the ITAA 1936 and ITAA 1997 except in some limited situations. An agreement between Country X and Australia operates to avoid the double taxation of income. An article of the agreement provides that for the purposes of this agreement a person is a resident of Australia if the person, under the law of Australia relating to Australia tax, is a resident of Australia. In your case, you are a tax resident of Australia under the law of Australia relating to Australia tax. Various articles in the agreement operate to make you salary assessable in both countries and to provide for Country X to allow a tax credit for the tax paid in Australia on your salary.

Relevant facts and circumstances | You are a citizen of Country X. | You are a tax resident of Country X. | You moved to Australia and have resided in Australia in since 2007, becoming a permanent resident in 2010. | You were hired by the Country X Consulate in 2008 as a LES member. You are not a diplomat or a foreign service officer. | You maintain your permanent home in Australia.