Private ruling: Assessability of Australian salary and wages
Published: November 2014
Ruling period: Year ended 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 March 2014

Ruling: Question and answer | Is the income you earn in Australia as a teaching professional assessable income in Australia? | No.

Relevant facts and circumstances: You are a citizen of Country X and a resident of Country X for taxation purposes. You are employed at an Australian university as a teaching professional for a short period each year. You are liable to pay tax on the salary you earn from the Australian university in Country X.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(3). | International Tax Agreements Act 1953 Section 4. | International Tax Agreements Act 1953 Section 5.

Reasons for decision: Summary: Generally speaking, if you are a foreign resident, your assessable income includes the ordinary income you derived directly or indirectly from all Australian sources during the income year, as stated in subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997). However, in determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements. 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 Country X Agreement is listed in section 5 of the Agreements Act. The Country X agreement is located on the Austlii website (www.austlii.edu.au) in the Australian Treaties Series database. The Country X Agreement operates to avoid the double taxation of income received by residents of Australia and Country X. Article X of the Country X Agreement states: 1. Where a professor or teacher who is a resident of one of the Contracting States visits the other Contracting State for a period not exceeding 2 years for the purpose of teaching or carrying out advanced study or research at a university, college, school or other educational institution in that other State, any remuneration the person receives for such teaching, advanced study or research shall be exempt from tax in that other State to the extent to which that remuneration is, or upon the application of this Article will be, subject to tax in the first-mentioned State. 2. This Article shall not apply to remuneration which a professor or teacher receives for conducting research if the research is undertaken primarily for the private benefit of a specific person or persons. In your case, you are a resident of Country X working as a teaching professional at an Australian university for a short period each year. You are liable to pay tax on the income you earn from this position in Country X. Therefore, under article X of the Country X agreement, your income is only taxable in Country X. The income you earn while working as a lecturer in Australia is therefore not assessable income in Australia.