Private ruling: Exempt income
Published: January 2015
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2014

Ruling: Question and answer | Is the income you receive while conducting academic research in Australia assessable income in Australia? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a national of another country. You have been appointed a Postdoctoral research fellow at an Australian university. You will be in Australia for more than 2 years. You are not a professor or a teacher.

Relevant legislative provisions: Income tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-15 | International Tax Agreements Act 1953 Section 4.

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) includes in assessable income, ordinary income derived from Australian sources. Subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income. 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 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 Z Agreement is listed in section 5 of the Agreements Act. The country Z Agreement operates to avoid the double taxation of income received by residents of Australia and country Z. Article X (1) of the country Z Agreement provides that where a professor or teacher who is a resident of country Z visits Australia for a period not exceeding two years for the purpose of carrying out research at an Australian university, any income received for the research shall be exempt from tax in Australia to the extent that it is taxable in country Z. In your case the income you receive from your appointment as a Postdoctoral research fellow is not exempt from income tax in Australia under Article X of the country Z Agreement because you are not a professor or a teacher which article X specifically requires you to be and your length of stay in Australia exceeds 2 years. Accordingly, your income is not exempt from tax in Australia and must be included in your Australian tax return.