Private ruling: Assessable income
Date of advice: 4 May 2022
Published: July 2022
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is income earned as a locally engaged staff member at the Country Z Consulate assessable in Australia? | A1: No Based on the information provided to the Commissioner your income earned as a locally engaged staff (LES) member at the Country Z Consulate is not assessable in Australia. Article 19 of the Country Z Convention is applicable for LES. It states that any payment for personal services as a government employee to a citizen of one state will be exempt from tax in the other state. Your income is paid from Country Z government funds and you are a citizen of Country Z therefore it shall be exempt from tax by Australia under Article x. However, Article x provides notwithstanding any provision of the Convention (except another paragraph in Article x, which does not apply to you), Australia may tax its residents (as determined under Article 4 (Residence)) as if this Convention had not entered into force. As you are an Australian resident under Article 4 of the Convention, Australia may tax your Country Z Consulate income. However, Australia is not exercising its right to tax your income earned as an LES member. As Australia is not exercising its right to tax this income under Article x, the income you receive as an LES member of the Country Z Consulate is only taxable in Country Z. As your income is not assessable in Australia it is not reportable in Australia. In your case there is no double taxation as income you receive as an LES member of the Country Z Consulate is not taxable or reportable in Australia.

Relevant facts and circumstances: You were hired by the Country Z Consulate General several years ago as a locally engaged staff (LES) member. You are a LES working at the Country Z Consulate General performing governmental functions in Australia within the meaning of the relevant Article of the Double Tax Convention between Australia and Country Z (the Convention). You are a citizen of Country Z. You are a citizen of Australia. You are a resident of Australia for taxation purposes. You are not a resident of Country Z for taxation purposes. You moved to Australia and have resided in Australia for several years. You became an Australian citizen in a few years ago. You are not a diplomat or a Foreign Service officer. You maintain your permanent home in Australia. Australia is not exercising its right to tax your income under Article x of the Convention.

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