Private ruling: Income source
Date of advice: 19 January 2026
Published: 9 March 2026
Ruling period: Year ending 30 June 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Is your employment income considered Australian sourced as stated in section 6-5 of the Income Tax Assessment Act 1997? | A1: No.

Relevant facts and circumstances: You are a citizen of Country A only. On DD MM 20YY, while in Australia, you signed an employment agreement with Company A for employment as a Job A working from your home address at Country A. Company A is based in State Z Australia. Your working arrangement is embedded in your employment contract. It specifies that you are a remote worker, and that you may perform work duties in Country A. You can only perform your duties from Country A. You cannot perform your duties from anywhere else in the world. The terms of your employment contract include: • Work performed entirely remotely from Country A. • Standard working hours. • Fixed salary. • No requirement to work in Australia. • No requirement to travel to Australia. On DD MM 20YY, you moved back to Country A and have been living there continuously since then. On DD MM 20YY, you commenced your employment with Company A in Country A. You previously resided and worked in Australia. Company A carries out residential construction, project management subcontractor coordination, procurement, administration and related building industry functions within NSW only. The company does not have any branches or offices overseas. The company has no clients in Country A. You perform the tasks of job scheduling, raising purchase orders, coordination between site and office and procurement. You are the company's full-time scheduler and your involvement in the virtual team includes online meetings, emails and supporting internal processes. Your salary is AUD $XX per annum. You are paid in Australian dollars into your nominated account. The rest of the workforce- employees and management are based in Australia. You do not have a desk or workspace available to you in the NSW office. You work from a designated workspace in your home in Country A, which is set up with a desk, computer and internet access. As all duties are performed in Country A, you acknowledge that you are not covered by an Australian modern award. However, your employer adopts the relevant standards from the Building and Construction General In-Site Award 2020 as guidance for minimum conditions

Relevant legislative provisions: Income Tax Assessment Act 1997, section 6-5

Reasons for decision: Summary: The relevant parts of section 6-5 of the ITAA 1997 state: (1) Your assessable income includes income according to ordinary concepts, which is called ordinary income. ... (3) If you are a foreign resident, your assessable income includes: (a) the ordinary income you derived directly or indirectly from all Australian sources during the income year; and (b) other ordinary income that a provision includes in your assessable income for the income year on some basis other than having an Australian source. In Nathan v. Federal Commissioner of Taxation 25 CLR 183 at 189-190 it was recognised that the ascertainment of the actual source of a given income is a practical, hard matter of fact. As stated by Bowen J in Federal Commissioner of Taxation v. Efstathakis (1979) 9 ATR 867; 79 ATC 4256 (the Efstathakis Case) at ATR 870; ATC 4259, to determine source: ... the answer is not to be found in the cases, but the weighing of the relative importance of the various factors which the cases have shown to be relevant. In the Cam, French and Efstathakis cases, after weighing up the relevant factors, it was held that the source of the income was where the taxpayer performed the services: Commissioner of Taxation v Cam & Sons Ltd (1936) 36 SR (NSW) 544 (the Cam Case) concerned wages paid to seamen employed to work on trawlers. They were engaged and paid in New South Wales, but most of their services were provided outside state territorial waters. Jordan CJ, with whom Street and Bavin JJ agreed in the Cam Case at 548, held that: Where income is derived from wages or salary, again the source has several factors. Personal exertion may be involved in negotiating and obtaining the contract of employment, in performing the stipulated services, and obtaining payment for them.... [I]n the ordinary case of the employment of a seaman... where there is nothing special, either in the circumstances of the contract of employment or in the payment, and where the work is both done and paid for in the ordinary course, the all-important factor is the doing of the work; and the contract of employment and the payment are relatively insignificant and formal elements. But this is not necessarily the case with respect to all wages or salary. In the case of an appointment to a sinecure, the engagement and the payment may be the only significant factors. Accordingly, the wages had to be apportioned based on 'working time in and out of New South Wales territorial waters (see the Cam Case at 553). In Federal Commissioner of Taxation v French (1957) 98 CLR 398 (the French Case), the taxpayer was employed as an engineer by the Australian company CSR which carried on business in New South Wales and, relevantly, New Zealand. Each year, the taxpayer spent two or three weeks in New Zealand as inspecting engineer for the company in its New Zealand business. At all other times, the taxpayer performed services for the company in New South Wales. A majority of the High Court held that the wages paid in respect of the period in New Zealand were sourced in New Zealand, because this is where the services were performed, this being the most important factor in Mr French's situation (see French Case at 411, 417 and 422). However, the Court also made comments to the effect that this decision did not necessarily determine what would be most important in every personal services contract. For example, Dixon CJ at 405 in relation to a director and at 406 in relation to an accountant procured to achieve a specified result, and Kitto J at 417-418 refers to a situation where remuneration was payable regardless of service, and to a person who worked sometimes overseas who was paid while on sick leave, and to where a period of overseas service might in substance be merely incidental to Australian service. In the Efstathakis Case, the taxpayer was a Greek National resident in Australia who was employed by the Greek Government as a secretary/typist in the Greek embassy. She had applied for the job in Greece, and the post had been gazetted there. She performed the services in Australia. Her net pay was compiled in Greece, a cheque was drawn on a bank in Greece and then received in Australia. A condition of her employment was that she could be posted anywhere in the world, but she would probably have resigned, as she had put down roots in Sydney, having child there, buying a unit, and marrying a naturalised Greek Australian. Bowen CJ, with whom Brennan and Deane JJ agreed, held that the wages paid to the taxpayer had an Australian source. His Honour considered the above factors, but gave most weight to 'the residence of the taxpayer in Australia and the facts that the services were performed and payment received [in Australia].....The payment of remuneration depended upon actual performance of the services (the Efstathakis Case at ATR 871; ATC at 4260). Notwithstanding the above, the outcome may be different in cases where special skills or creative talents are being rendered ( Federal Commissioner of Taxation v. Mitchum (1965) 113 CLR 401; (1965) 13 ATD 497; (1965) 9 AITR 559) (the Mitchum case). In such cases, factors such as the place of negotiation and execution of the contract may be relatively more important. In considering the earlier French case, the High Court stated at 408-409, that: Taylor J., as I read his reasons, was engaged in deciding a question of fact deriving what assistance he could from the decided cases. He said, speaking, of course, of a case of wages or salary for work done or services performed - "... if, as the statute requires, I am compelled to select as the source of an employee's remuneration either the locus of the contract of service, or, the place where the remuneration is payable thereunder, or, the place where the services are performed which give rise to the right of remuneration I am content to conclude that, in the absence of special circumstances, this third element should be chosen" (1957) 98 CLR, at p 422 In so saying, his Honour was not, in my opinion, laying down a rule of law: he was expressing his reasons for the conclusion of fact to which he had come. I do not feel compelled or persuaded by the decision of the Court in French's Case (1957) 98 CLR 398 to hold that in every case where work forms the consideration for wages or salary paid, the source of the income constituted by the wages or salary is in the place where the work is done. ... It is sufficient for present purposes to say that neither French's Case (1957) 98 CLR 398 nor any other of which I am aware lays it down that for the purposes of the Act the source of wages, salary or remuneration for services performed is necessarily, in default of special circumstances, in the place where the work is done or the services performed. From the above cases, source cases concerning the provision of personal services are decided by weighing up the outcomes of the consideration of the following three factors (with the weighting given to each determined by their relevance to the case): • the place where the contract of employment is entered into, • the place where remuneration is payable, and • the place where the services are performed. | Detailed Reasoning - Application to your circumstances: In your case, you are employed by Company A, an entity located in Australia. Your employer carries out residential construction, project management subcontractor coordination, procurement, administration and related building industry functions within NSW only. They only have staff in their NSW office, with you as a remote worker in Country A. Your employer has clients in Australia only, they don't have any clients overseas. Since the 20YY financial year, you have been employed as a Job A working from Country A. You signed a new employment contract on DD MM 20YY which came into effect after you arrived in Country A on DD MM 20YY. Your employment contract recognises the fact your premises for work is effectively your home in NZ. Therefore, this factor does support the source of the income being in Country A. However, the fact you are paid in Australian dollars by an Australian employer, into an Australian bank account may give the impression of an Australian source. Although, these arrangements may be due to payroll arrangements that you put in place when you first started with your employer and are not conclusive indications of taxable source. In the Cam, French and Efstathakis cases, it was held that the source of the income of the respective employees was where the taxpayer performed the services. However, in those cases the place where the taxpayer was located was the same as where the taxpayer did the work, where it was given effect to and where the outcome of the work occurred: • the Cam Case - the fishermen undertook fishing activities putting nets into the water and fished obtaining fish from the sea which all occurred where the boat on which he was working on at the time was located, • the French Case - the professional services the taxpayer provided in undertaking inspections were in relation to things he inspected in the locations that he was in at the time he conducted the inspections and which he subsequently reported on, and • the Efstathakis Case - the taxpayer undertook secretarial duties and typing work. Her work was given effect to and the outcome of the work occurred in the location she worked at. Your case can be distinguished from these cases, as the place where your work is given effect to and where the outcome of the work occurs is not just with your employer in Australia, but also in Country A. While the actual physical location of your designated company office is in NSW Australia, you are working remotely from Country A. Your presence at the Australian office has not been a requirement and you have not returned to Australia while working in Country A. While it is acknowledged Australia is technically where your employer has an office, the fact the outcome of the work occurs both in Australia and the fact the work is undertaken by you exclusively in Country A supports the position the employment has an overseas source in Country A.