Private ruling: Foreign source income
Date of advice: 11 August 2020
Published: September 2020
Ruling period: Year ended 30 June 2019 | Year ended 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2018

Ruling: Q1: Is the maintenance allowance you receive from a foreign country organisation exempt from income tax in Australia? | A1: Yes

Relevant facts and circumstances: You came to Australia in 20xx to conduct the research hosted by an Australian University. You hold a subclass xxx visa; the visa allows you to stay in Australia for up to 3 years. You are a temporary resident of Australia. You receive maintenance allowance from an organisation in your home country. There is no employment contract between you and the organisation.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2 ) | Income Tax Assessment Act 1997 Section 768-910

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. The foreign source income exemption for temporary residents, contained in Subdivision 768-R of the ITAA 1997, provides an exemption for most foreign income derived by temporary residents of Australia. Section 768-910 of the ITAA 1997 provides that ordinary income derived from a foreign source, excluding where the income relates to employment or other personal services provided by the individual; is exempt from income tax in Australia when derived by a temporary resident of Australia. In your case, you are a temporary resident of Australia, there is no employment relationship between you and the organisation. You are just receiving maintenance payments to support you conducting research in Australia. This payment would have a foreign source. Accordingly, the maintenance allowance you receive is exempt from income tax in Australia.