Private ruling: Foreign income
Published: November 2013
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2006

Ruling: Question and answer | Is the income you derive from working overseas for an Australian organisation whilst you are a foreign resident for income tax purposes, assessable income in Australia? | No.

Relevant facts and circumstances: You are a permanent resident of Country Y. You are a foreign resident of Australia for tax purposes. You have lived in Country Y for a number of years. You pay tax in Country Y. You work for an Australian employer in country Y. You have a contract with your employer. You perform and will continue to perform all your work duties in Country Y.

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

Reasons for decision: Summary: Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that ordinary income derived by a foreign resident directly or indirectly from Australian sources, as well as other ordinary income included by a provision on a basis other than having an Australian source, is assessable. Salary and wages are ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997. Generally, Australian courts have held that the source of employment income is where the employee performs their duties. Thus, employment income earned while being carried out overseas is considered to be sourced in that overseas country. In your case, you are a resident of Country Y and you are employed by an Australian organisation to perform duties in overseas. Therefore, as the source of your income is from overseas, your salary income will not be assessable in Australia.