Private ruling: Assessability of foreign source income
Date of advice: 23 April 2026
Published: 13 July 2026
Ruling period: Years ended 30 June 20YY | Years ended 30 June 20YY | Years ending 30 June 20YY | Years ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will income you derive from your employment as a X with an internationally based airline flying on international flights be assessable in Australia? | A1: Yes. | Q2: Will income you derive from your employment as a X with an internationally based airline flying domestically within the country that the airline is based in or on domestic flights within that country as the first leg of international flights be assessable in Australia? | A2: Yes.

Relevant facts and circumstances: You are a resident of Australia for tax purposes. You are employed as a X. You are a full-time employee. The head office of your employer is in a foreign country. The employer is an international airline. You are working on a visa which the employer applies to renew every X years on your behalf. Your current visa is valid until MM 20YY. Due to the nature of the employer's operations, most of your flights are to international destinations. You are based in a city in the foreign country and a typical flight you undertake begins in that city, flying to international destinations, then back to that city. The X that you X does not X to Australia. You are also required to X domestically in the foreign country. You pay income tax on the income earned from the employer in the foreign country. You have provided pay slips as evidence of the income tax you have paid in the foreign country. You X to the foreign country for several months at a time for your work, then return to Australia.

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

Reasons for decision: Summary: Subsection 6-5(2) 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, in determining liability to tax on the foreign source income of an Australian resident, it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreement. Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the ITAA 1997 so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations). Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. The Australia/foreign country Double Tax Agreement (foreign country DTA) is listed in section 5 of the Agreements Act. The foreign country DTA operates to avoid the double taxation of income received by residents of Australia and the foreign country. Article 15(1) of the foreign country DTA provides that salaries and wages derived by an Australian resident individual in respect of employment carried out in the foreign country may be taxed in both Australia and the foreign country. Article 15(2)(a) contains an exception to Article 15(1) which may give sole taxing rights to Australia if employment is carried out in the foreign country for periods not exceeding 183 days in a 12-month period and the employer is not a resident of the foreign country. However, this is not relevant in your situation as you work for the employer for more than 183 days in an income year and in any case, the employer is a resident of the foreign country. Notwithstanding the provisions of Articles 15(1) and (2), Article 15(3) states that remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by a resident of one of the Contracting States (that is, Australia) may be taxed in that State (that is, Australia). | Detailed Reasoning - Application to your circumstances: In your case, Article 15 will apply to give Australia taxing rights over your foreign source income so that the employment income you derive from the employer from both domestic flights in the foreign country and international flights will be assessable in Australia under subsection 6-5(2) of the ITAA 1997.