Private ruling: Foreign resident - employment income
Date of advice: 28 November 2025
Published: 12 January 2026
Ruling period: Year ended 30 June 20YY | Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Is your employment income derived for work performed in Australian waters exempt from Australian tax under Article 14 of the Convention between the Government of Australia and the Government of Country B for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains [20YY] ATS XX (Country B Agreement)? | A1: No.

Relevant facts and circumstances: You are a Country B national and lodge tax returns in Country B as a tax resident. Country B resident employees who work at sea may not necessarily pay tax in Country B on their employment income, to the extent they qualify for an occupational agreement deduction in Country B (a deduction generally available to Country B resident crew who work on a qualifying vessel outside of Country B for a qualifying period of at least 365 days). You have no social connections in Australia and do not intend to move to, or live in, Australia outside of your short term employment commitments. You are a foreign resident of Australia for tax purposes. You were performing duties in Australia on a temporary work visa, as applied for by Subgroup Company Australia (SG Co Australia). You work at sea in Australian waters on a 5 weeks on /5 weeks off rotation until the visas expire. You were not in Australia for a period or periods exceeding in aggregate 183 days in any 12 month period commencing or ending in the years ended 30 June 20YY and 30 June 20YY. The vessel and you will undertake an assignment in another location after the work in Australia is completed. SUBGROUP COMPANY C AND THE GROUP COMPANY M (GROUP-CO M) SUBGROUP COMPANY C (SG Co C) • SG Co C is tax resident of Country C and is based there. • SG Co C will remain your legal employer during the ruling period. • SG Co C has no permanent establishment or fixed base in Australia. • SG Co C is a Global Employment Company (GEC) and preferred service provider of offshore crew to related entities within the Group-Co M. • SG Co C selects, recruits and employs the Group-Co M's global offshore workforce to supply labour requirements for offshore projects. • SG Co C is a separate legal entity and has its own board, budget, policies, payroll and staff. SUBGROUP COMPANY AUSTRALIA (SG Co AUSTRALIA) • SG Co Australia is tax resident of Australia and its operations are based there. • SG Co Australia provides professional xx services to the offshore xx industry. • SG Co Australia holds the contract for the Australian project on which you were requested to work. SUBGROUP COMPANY BD (SG Co B-D) • SG Co B-D is tax resident of the Country B and is based there. • SG Co B-D has a permanent establishment in Australia. • SG Co B-D l leases a vessel under a xx charter from a related entity, Group Co X. • SG Co B-D then leases the vessel to SG Co Australia under a 'time charter' arrangement including the vessel, agreed marine crew and other operating services provided by SG Co B-D. • The vessel for this project is Vessel A. • The vessel is a foreign flagged ship registered in Country T. • You work on the Vessel A which operates in Australian waters at times during the ruling period. SUBGROUP COMPANY B-E (SG Co B-E) • SG Co B-E is tax resident of the Country B and is based there. • SG Co B-E does not have a permanent establishment in Australia. • SG Co B-E handles the planning and logistics for crews within Group-Co M. GROUP COMPANY M (Group-Co M) • SG Co C, SG Co Australia, SG Co B-D and SG Co B-E are subsidiaries of Group Company Z (Group-Co Z), a holding company for a global group of many companies, Group-Co M. Diagram 1: Group Company M involved in the management of Subgroup Company Australia THE AUSTRALIAN PROJECT SG Co Australia: • was awarded a contract for a Project in Australia by joint venture participants Company R and Company Q • was also awarded the contract for another Project in Australia by Company S • is responsible for the project management, procurement and engineering of both the projects with support from the Group-Co M worldwide • has engaged SG Co B-D to charter equipped vessels for delivery of the projects • leases the vessels under a 'time charter' agreement with SG Co B-D which grants SG Co Australia the use of the vessel and crew for a specified period, and • takes a corporate tax deduction for payments made to SG Co B-D which include the costs of the vessel, agreed marine crew and other operating services provided by SG Co B-D. • SG Co Australia advises SG Co B-D and SG Co C of the crew requirements and SG Co C identifies and deploys the individuals • SG Co Australia applies for the relevant visas for the crew and invites them to Australia to perform the work with supporting documents and information supplied by SG Co C • under the time charter agreement, SG Co B-D maintains responsibility for maintenance of the vessel and SG Co Australia decides the routing and has full operational control of the vessel for the duration of the contract • SG Co Australia are entitled to the revenue for completion of this project and, as such, are also responsible for bearing any associated costs including vessel and labour costs • SG Co Australia are responsible for rectifying any defects in project work • SG Co Australia procure and provide the local non vessel related equipment required for the execution of the work. EMPLOYMENT CONTRACT The terms of engagement are stated in the employment contract with SG Co C and the Occupational Agreement required by a convention. Job title: Position A Point of origin: City K Contract days of at least 183 are required annually. Contract days are organised based upon the needs of SG Co C and its clients within Group-Co M. The contract also includes the following sections or part thereof, and is not limited to: Working Time and Scheduling: Failure to make yourself available or to mobilise to any worksite as directed by the SG Co C, will be regarded as a serious breach of contract and may render you liable for action under the SG Co C 's Disciplinary Provisions. Work location: You are required to work on any worksite or at any onshore or offshore base wherever in the world the worksite or base is located. Fitness to Work: It is a requirement of this Agreement that you are in possession of an up to date certificates suitable for the region in which you are assigned. In the event that you are no longer covered by such certification or no longer competent or are unfit to work in any applicable region or in your role this contract may be terminated in accordance with its terms. Notice Period: If you wish to terminate your employment, one months' notice in writing must be given to SG Co C if SG Co C wishes to terminate your employment, it must give you three month's written notice SG Co C reserves the right to terminate your employment without notice in the event of gross misconduct or material breach of contract. Disciplinary Procedure: The Company's Disciplinary Procedure is designed to help and encourage all employees to achieve and maintain standards of conduct, attendance and job performance. If you wish to appeal against any disciplinary decision, you may apply in writing to a member of the Human Resources Team in accordance with the terms of the Company's Disciplinary Procedure. Drugs and Alcohol: you are required to understand, accept and comply with the provisions of SG Co C policy relating to Substance Abuse. Any breach or non-compliance with these provisions may result in disciplinary action up to and including summary dismissal. Bribery and Corruption: you are required to comply with all applicable laws, statutes and regulations and policies relating to anti-bribery and anti-corruption including, but not limited to a legislated Act. Failure to do so may result in disciplinary action being taken against you, up to and including dismissal. Immigration Status and Right to Work: you are required to satisfy and comply with the immigration requirements in any country where you may be assigned to work. Any failure by you to meet the requirements of any applicable immigration regime, whether in Country B or elsewhere, will entitle the Company to terminate your employment without notice or payment in lieu. Governing Law: this Principal Statement of Employment shall be governed by and construed in accordance with the Law of Country C. Definitions: "Client" means any purchaser of services from a party to whom services are supplied to or party contracting with the company or any Group Company; "Group Company" means any company which is a parent, associated company of or subsidiary of the Company, or any company which is a parent, subsidiary, holding or associated company of such company as those terms are defined in the Companies Act 2006. Collective Agreement: there are no collective agreements which directly affect your terms and conditions of employment, unless explicitly provided for under the terms of any negotiated agreement in place between SG Co C and another entity. You are required to achieve and maintain standards of conduct, attendance and job performance detailed in the Company's Disciplinary Procedure, contained in the relevant policy, which does not form part of your employment contract. The procedure provides that you may appeal a decision in writing to the Human Resources Team. Certification: You must ensure you keep in your possession at all times such documentation as is necessary to meet any applicable guidelines relevant to your job role or as may have been notified to you and these will include but are not limited to: • Travel documents including a passport with a minimum of 6 months validity. • Offshore certificates suitable for the region and or role in which you are assigned. • Trade certificates to include, where applicable, your xx logbook. • Documentation and certification pertaining to the Standards of Training, Certification, and other bodies and or other professional standards applicable to your job role. Compliance with Policies: You note and agree that, in addition to your obligation to comply with policies and procedures laid down by the Company as provided for in this Agreement, you will where applicable abide by the policies and procedures of any Group Company or Client or any third party with responsibility for any location to which you may be assigned to work. ROLE PROFILE SG Co B-E is responsible for preparing the standard Role Profiles and SG Co C reviews and approves these documents. The Group-Co M has standard Role Profiles for each position which are consistent across the fleet. Position A's Role Profile includes the following responsibilities: Reports to Position B who is an employee of SG Co C, and Position C-S who is employed by Subgroup company SH (SG Co S-H) Position A, as head of a department and a key member of the Offshore Management Team (OMT), is responsible to Position B for the management of the department and responsibility for the technical status of the vessel, its systems, all technical equipment permanently installed on board and all technical equipment temporarily installed on board the vessel. Advising the Position C-S, Position B and D where there are items of concern which may affect operation or production. Providing services and / or support as requested by the Project Team or as instructed by Position B. The OMT includes Position A and B, and Position D, all of whom are employees of SG Co C. When the vessel is operational and working on Australian projects, the key day to day management and reporting is to / from SG Co Australia onshore project management team via Position D. Position D works with the OMT members to align and organise how the vessel, equipment and marine and project teams will be set up to deliver on the instructions from the Australian project management team. Position B has ultimate responsibility for the asset and the people while Position A ensures the vessel and relevant equipment systems are maintained, declared fit for purpose and operated to standards. THE KEY RELATIONSHIPS AND STAKEHOLDERS External: • Position C-S • Group-Co M Technical Support • Any other external party necessary to comply with this role profile. Internal: • Position B • Position D • Members of the department • Members of Equipment departments • Any other internal party necessary to comply with this role profile. INTERACTIONS There is no formal contract between SG Co Australia and you as of December 20YY. There are no payments made by SG Co Australia to SG Co C directly relating to the service provided by you. However, as in Position A on the vessel, the role you perform is in ensuring the vessel and all technical equipment/machinery installed on the vessel is appropriately maintained and operational for the success of the project. You are required to provide services and/or support as requested by Position B who you directly report to. When the vessel is operational and working on Australian projects, the key day to day management and reporting is to/from the SG Co Australia onshore project management team via Position D for project related activities. In practice there is no instruction from SG Co Australia to you as you report to and take instruction from the Position B. You only communicate to the SG Co Australia onshore project management team via Position D when the vessel is operational and working on Australian projects. You do not report or communicate directly to SG Co Australia. In practice, SG Co Australia does not directly monitor your performance themselves, rather they monitor the operation of the vessel more broadly. Having said this, SG Co Australia are acutely aware that Position A is responsible for ensuring the vessel and relevant equipment systems are maintained, fit for purpose and operated to an industry/legislative standard. Accordingly, to the extent there are issues with the vessel and this raises concerns for SG Co Australia regarding your performance, these would be raised by SG Co Australia to SG Co C. Where performance management was necessary, this would be managed by SG Co C and supported by Position C-S. SG Co Australia may provide input on their observations on your performance. SG Co Australia has no legal right to terminate your role in the event of unsatisfactory performance. If performance is deemed unsatisfactory, SG Co B-D may be seen to be in breach of the charter agreement and would be requested by SG Co Australia to review their selection of personnel for the project. Performance management and termination of you would be solely managed by the employer, SG Co C. This may be based on feedback/observations provided by SG Co Australia. SG Co C has processes and policies on their management systems which are for SG Co C employees specifically which outline how disciplinary action among other things is managed. In the event the vessel is unavailable for use due to repairs, maintenance (may or may not be directly related to your performance), SG Co Australia may not be required to pay the time charter hire rate to SG Co B-D. The parameters of this interaction are defined and refer to periods of breakdown (linked to the status of the vessel). At no point are your services singled out - instead it is captured as to whether the vessel is operational or on breakdown. This time charter rate includes payment for your services. You would be paid in accordance with your employment contract, subject to any performance review process that would be initiated as a result of unsatisfactory performance. Marine crew are mainly offshore crew/technical specialists who are employed to perform the role globally for various projects - similar to you, these crew are legally employed by SG Co C. While you may have some interaction with these crew, your primary working relationships are with specific crew in your department and the Offshore Management Team. SG Co Australia does not hire any other offshore crew/technical specialists who work on the offshore energy project. You do not operate, maintain or supervise the operation of the non-vessel related equipment required for the execution of the offshore energy project. The local equipment is procured and managed by SG Co Australia / the local client for the execution of the work and often comes with dedicated technicians to operate this non-vessel related equipment. You undertake any activities which directly relate to the offshore project. SG Co C is a service provider and is the preferred supplier of offshore crew to Group-Co M. The GEC selects, recruits and employs Group-Co M 's global offshore workforce and engages with the business to ensure workforce requirements for projects are met in a timely, global and cost effective way. SG Co C provides offshore crew to other Group-Co M groups apart from SG Co B-E, SG Co B-D, and SG Co Australia. Currently, the GEC does not provide crew to external entities. SG Co B-Ds' Permanent Establishment (PE) in Australia is related to the vessel chartering activity in Australia during offshore periods of the projects in Australia undertaken by SG Co Australia. Income generated by SG Co B-D arising from the time charter of relevant vessels to SG Co Australia is attributable to the said PE. SG Co B-D incurs 'time service charges' on the marine crew from SG Co B-E as part of the expenses attributable to the PE related to the specific vessel utilised in Australia. Therefore, the expense from SG Co B-E that is attributable to the PE is claimed as a tax deduction for Australian tax purposes. SG Co Australia claims a tax deduction for the time-charter of vessel charged by SG Co B-D. SG Co B-D does not charge marine crew service rates directly to SG Co Australia. Marine crew costs form part of the time-charter of vessel. Costs and expenses Your salary and wage income is delivered by SG Co C into your Country B bank account. Your salary, terms etc are the same regardless of which project you work on and location. However, adjustments are made for appropriate taxation withholdings in accordance with legislation and policy. SG Co Australia remits Australian PAYG and makes Superannuation Guarantee contributions on your behalf, based on income considered to be sourced in Australia. These costs are borne by SG Co Australia. Some of the supporting administration for these payments is performed by SG Co C. Your payment summaries list your 'Payer' as SG Co C however, the lodgment of the summaries are under the ABN of SG Co Australia and other entities. Your salary and other employment costs are charged to SG Co Australia via intercorporate recharge as part of the 'time charter' agreement. The time charter hire rate includes compensation for the vessel, agreed marine crew and other operating services provided by SG Co B-D. In the event the vessel is unavailable for use due to repairs, maintenance, or strikes, SG Co Australia is not required to pay the time charter hire rate to SG Co B-D. INTERCOMPANY AGREEMENT A The Intercompany Agreements A are between SG Co B-E, (the "Crew Provider"), registered in Country B and SG Co C, (the "Employer"), registered in Country C, where: • the Crew Provider and the Employer are both indirect subsidiaries of Group-Co Z the ultimate holding company of Group-Co M • the Crew Provider provides offshore personnel services in respect of the deployed personnel to other Group-Co M entities that operate vessels and assets and requires offshore personnel to manage the project and/or manage the assets • the Employer has agreed to supply relevant offshore personnel services to the Crew Provider to enable crew provider to fulfil its obligations (historic agreement) • the Employer wishes to supply relevant offshore personnel services to the Crew Provider (current agreement) • The Parties have agreed to formalise the arrangement for such assistance as set out herein (current agreement). The 20YY Agreement references: • the standard terms and conditions for provision of offshore personnel • the transfer pricing document policy and procedure and any other relevant transfer pricing document published on a Group-Co M system The Intercompany Agreement A standard terms and conditions (OP STaC) includes Definitions and Terms used but not otherwise defined in the present document shall have the same meaning as the meaning ascribed to those terms in the Form of Agreement. Relevant definitions include: • Crew Provider means SG Co B-E • Employer means the relevant Group-Co M 7 payroll entity providing the Services as identified in the Form of Agreement • Services means the provision of suitably qualified offshore personnel to the Crew Provider to be deployed on the Vessel, as further detailed in section 1 • Vessel means the vessels and/or barges where offshore personnel provided by the Employer will be deployed as per the Crew Provider needs. SERVICES TO BE PROVIDED BY THE EMPLOYER In consideration of the compensation set forth in section 3 hereof, the Employer shall supply relevant personnel services as may be required. Such Services shall include the development and maintenance of a pool of offshore personnel for deployment, within the terms and conditions of individual's contracts of employment, to Vessel. The Employer remains the employer of offshore personnel and retains the relevant responsibilities, including: Administer all payroll and personal taxation/social security for its offshore personnel; Complying with the wage rates and terms and conditions of employment prescribed by an award, workplace agreement, industrial agreement, code, law of other requirement applicable to the offshore personnel; Arrangement of performance and training and salary reviews; Payment of expenses to the offshore personnel based on information and expense forms approved by the Crew Provider. The Employer will ensure that the personnel have the necessary competence to undertake the role they have been assigned in accordance with flag state and Group internal requirements. Employers' liability insurances are arranged by Group's insurance department on behalf of the Employer. OBLIGATIONS OF THE CREW PROVIDER The Crew Provider shall ensure that all necessary decisions are communicated in a timely manner to the Employer. COMPENSATION TO EMPLOYER In consideration of the Employer providing the Services, the Crew Provider agrees to procure reimbursement to the Employer for all costs incurred by it in connection with the Services rendered. Payment for the Services shall be made as follows: the Services will be invoiced by the Employer to the Crew Provider based on the Full Cost Rates, as revised from time to time, and in accordance with the Transfer Pricing Document. INDEMNITY AND LIABILITY Each of the Parties hereby releases, indemnifies and agrees to hold harmless the other Party (and its officers, directors, employees) to the full extent permitted by applicable law, from and against any and all claims, losses, liabilities, damages, settlements, expenses and costs (including, without limitation, attorneys' fees and court costs) which arise out of provision of the Services whatsoever et howsoever caused (including negligence), other than (i) such losses and/or damages which arise out of a Party's gross negligence or wilful misconduct, or (ii) which is based upon any action not authorized by the terms of the Agreement. Neither Party shall be liable to the other for any indirect or consequential loss or damage, or for any loss of production, loss of revenue, loss of profit, loss of contract, loss of use, downtime, arising out of or in connection with the Agreement, whatsoever and howsoever caused (including negligence). ASSIGNMENT Except as expressly provided in the Agreement, no Party shall have the right to assign or otherwise transfer its rights or obligations under this Agreement, except with the prior written consent of the other Party which shall not be unreasonably withheld. The Agreement shall endure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. NO PARTNERSHIP OR JOINT VENTURE Nothing contained in the Agreement shall be construed as creating any agency, partnership or other form of joint enterprise between the Parties. The relationship between the Parties with respect to the matters contemplated by the Agreement shall at all times be that of independent contractors, and the Agreement confers no rights upon a Party except those expressly granted herein. INTERCOMPANY AGREEMENT B Intercompany Agreement B is between SG Co B-D, (the " Company ") registered in Country B and SG Co B-E, (the " Crew Provider "), collectively referred to as the Parties or Party. It provides: • the Company and the Crew Provider are both indirect subsidiaries of Group-Co Z the ultimate holding company of the Group-Co M • the Company provides vessel chartering services to other Group-Co M entities that operate vessels and assets for projects or to clients and requires offshore personnel services to manage the project and/or the assets • The Crew Provider wishes to supply relevant offshore personnel and services to the Company. The Parties have agreed to formalise the arrangements for such assistance as set out herein. Agreement B references the: • standard terms and conditions for Intercompany Agreement B • transfer pricing document policy and procedure and any other relevant transfer pricing document published on a Group-Co M system. Intercompany Agreement B Standard Terms and Conditions ( OC STaC ) includes Definitions and Terms used but not otherwise defined in the present document shall have the same meaning as the meaning ascribed to those terms in the Agreement. Relevant definitions include: • Company means the relevant Group-Co M entity receiving the Services as identified in the Form of Agreement • Crew Provider means SG Co B-E • Services means the provision of suitably qualified offshore personnel for the Vessel and related services as required by the Company, as further detailed in section 1 • Vessel means the vessels and/or xx chartered or operated by the Company. The OC STaC includes the following sections which may be relevant: SERVICES TO BE PROVIDED BY CREW PROVIDER In consideration of the compensation set forth in Section 3 hereof, the Crew Provider shall supply relevant offshore personnel and Services as may be required. Such Services shall include but not be limited to the following functions: Provision of Offshore Personnel: • To provide personnel to crew, operate and maintain the Vessel and equipment and to support offshore operations as requested • To ensure that the personnel have the necessary competence in accordance with the flag state and Group internal requirements, to undertake the role to which they are assigned • To ensure that the personnel have the necessary approvals, work permits or visas to work in the region or country in which the operation is being carried out • To ensure compliance with applicable regulations Administration of Offshore Personnel: The Crew Provider shall be in charge of the administration of offshore personnel which include but not limited to ensure that the offshore personnel receive the relevant wages in accordance with the requirement applicable to the offshore personnel Planning and allocation of Offshore Personnel: To manage all activities relating to the planning and allocation of offshore personnel, including: • Planning crew changes and the mobilisation/demobilisation of offshore personnel from the Vessel • Allocating personnel to posts in accordance with the Company's needs of the post as determined by the functional disciplines. Offshore Personnel Logistics To manage the mobilisation/demobilisation of offshore personnel to and from each of the Vessel including: • Arrangement of travel and visas for offshore personnel in compliance with the Group travel policy and local requirements • Organizing all crew changes in close co-operation with the offshore management team, xx operations managers, fleet managers and project/country management • Management of travel and visas for visitors to the Vessel when requested • Arrangement of medical and evacuation insurance cover for offshore personnel. OBLIGATIONS OF THE COMPANY The Company shall ensure that all necessary decisions are communicated in a timely manner to the Crew Provider. COMPENSATION TO THE CREW PROVIDER In consideration of the Crew Provider providing the Services, the Company agrees to procure reimbursement to the Crew Provider for all costs incurred by it in connection with the Services rendered. Payment for the Services shall be made as follows: the Services will be invoiced by the Crew Provider to the Company based on the Full Cost Rates, as revised from time to time, and in accordance with the Transfer Pricing Document. INDEMNITY AND LIABILITY Each of the Parties hereby releases, indemnifies and agrees to hold harmless the other Party (and its officers, directors, employees) to the full extent permitted by applicable law, from and against any and all claims, losses, liabilities, damages, settlements, expenses and costs (including, without limitation, attorneys' fees and court costs) which arise out of provision of the Services whatsoever et howsoever caused (including negligence), other than (i) such losses and/or damages which arise out of a Party's gross negligence or wilful misconduct, or (ii) which is based upon any action not authorized by the terms of the Agreement. Neither Party shall be liable to the other for any indirect or consequential loss or damage, or for any loss of production, loss of revenue, loss of profit, loss of contract, loss of use, downtime, arising out of or in connection with the Agreement, whatsoever and howsoever caused (including negligence). ASSIGNMENT Except as expressly provided in the Agreement, no Party shall have the right to assign or otherwise transfer its rights or obligations under this Agreement, except with the prior written consent of the other Party which shall not be unreasonably withheld. The Agreement shall endure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. NO PARTNERSHIP OR JOINT VENTURE Nothing contained in the Agreement shall be construed as creating any agency, partnership or other form of joint enterprise between the Parties. The relationship between the Parties with respect to the matters contemplated by the Agreement shall at all times be that of independent contractors, and the Agreement confers no rights upon a Party except those expressly granted herein. INTERCOMPANY AGREEMENT C In relation to Vessel A Intercompany Agreement C is between SG Co B-D, (the " Charterer ") registered in Country B and SG Co Australia (the " Operator "). The Charterer and the Operator are collectively referred to the Parties or individually the Party . It provides: A. The Charterer and the Operator are both indirect subsidiaries of Group-Co Z, the ultimate holding company of Group-Co M B. The Charterer has been tasked with providing full ship chartering services from an overall group co-ordination standpoint to other subsidiaries of the Group-Co M Group, and possesses the necessary technical expertise, experience, capability and availability to provide such services C. The Operator has agreed to hire the Vessel on a time charter basis D. The Parties have agreed to formalise the arrangements for such hire as set out herein. NOW THEREFORE, in accordance with the Terms and Conditions of this Time Charter Party, which encompasses the following documents in descending order of precedence: • Form of Agreement • Annex X - Amendments to Part I and II of the Standard Time Charter Party for Offshore Service Vessel, ST 20YY document • Annex X - Standard Time Charter Party for Offshore Service Vessel, ST 20YY document • transfer pricing document: policy and procedure and any other relevant transfer pricing document published on a Group-Co M system. TIME CHARTER AGREEMENT The Standard Terms and Conditions relevant to the Time Charter Agreement are industry standard Terms and Conditions. The Liabilities and Indemnities Definitions For the purposes of this Clause "Owners' Group" shall mean: the Owners, and their contractors and sub-contractors, and Employees of any of the foregoing. For the purposes of this Clause "Charterers' Group" shall mean: the Charterers, and their contractors and sub-contractors, co-venturers and customers (having a contractual relationship with the Charterers, always with respect to the job or project on which the Vessel is employed), and Employees of any of the foregoing. Based on the sample copy of the ST 20YY document, we understand the 'Owner' according to the definition in clause 14 to mean the owner of the bare-boat Group Co X. As SG Co B-D leases the vessel from Group Co X under the bare-boat charter and then leases on the vessel to SG Co Australia under a 'time charter' arrangement we understand the "Charterers' Group' to include SG Co B-D and SG Co Australia. Clause X Owners provides: notwithstanding anything else contained in this Charter Party excepting, several clauses and subclauses, the Charterers shall not be responsible for loss and damage to the property of any member of the Owners' Group, including the Vessel, or for personal injury or death of any members of the Owner's Group arising out of or in any way connected with the performance of the Charter Party, even if the loss, damage, injury or death is caused wholly or partially by the act, neglect, or default of the Charterers' Group even if these are wholly or partially by the unseaworthiness of any vessel; and the Owners shall indemnify, protect, defend and hold harmless the Charterers from any and against all claims, costs, expenses, actions, proceedings, suits, demands and liabilities whatsoever arising out of or in connection with such loss, damage, personal injury or death. Clause X Charterers provides: notwithstanding anything else contained in this Charter Party excepting Clauses x , x, sand x, the Owners shall not be responsible for loss of, damage to, or any liability arising out of anything towed by the Vessel, any cargo laden upon or carried by the Vessel or her tow, the property of any member of the Charterers' Group, whether owned or chartered, including their Offshore Units, or for personal injury or death of any member of the Charterers' Group or of anyone on board anything towed by the Vessel, arising out of or in any way connected with the performance of this Charter Party, even if such loss, damage, liability, injury or death is caused wholly or partially by the act, neglect or default of the Owners' Group, and even if such loss, damage, liability, injury or death is caused wholly or partially by the unseaworthiness of any vessel; and the Charterers shall indemnify, protect, defend and hold harmless the Owners from any and against all claims, costs, expenses, actions, proceedings, suits, demands, and liabilities whatsoever arising out of or in connection with such loss, damage, liability, personal injury or death.

Relevant legislative provisions: Income Tax Assessment Act subsection 6-5(1) | Income Tax Assessment Act subsection 6-5(3) | Income Tax Assessment Act section 8-1 | Taxation Administration Act 1953 section 4 | Taxation Administration Act 1953 section 5

Reasons for decision: Summary: Pursuant to subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) the assessable income of a foreign resident includes ordinary and statutory income derived from Australian sources. You derive employment income from SG Co C. Income derived from employment is ordinary income and is included in your assessable income under subsection 6-5(1) of the ITAA 1997. Income derived from employment is generally considered to be 'sourced' in the place where the duties or services are performed. You perform the work in Australian waters and as such the employment income from SG Co C is sourced in Australia and therefore prima facie assessable in Australia. However, because you are not a resident for tax purposes in Australia, it is necessary to consider whether the applicable taxation agreement alters the general application of Australian tax laws. Sections 4 and 5 of the International Tax Agreements Act1953 (Agreements Act) incorporate that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the ITAA 1997 and provides that the provisions of a taxation agreement have the force of law. In your case the relevant tax agreement is the Convention between the Government of Australia and Country B for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains (Country B Agreement). This agreement operates to avoid the double taxation of income received by Australian and Country B residents. | Detailed Reasoning - The Country B Agreement: Article 14 of the Country B Agreement deals with the treatment of income from employment. Article 14(1) of the Country B Agreement provides that remuneration derived by a resident of Country B shall be taxable in Country B unless the employment is exercised in Australia. If the employment is exercised in Australia, then the income may be taxed in Australia. In your case, the employment is 'exercised' in Australia because you render your services in Australia in exchange for your income. Therefore, prima facie your employment income would be taxable in Australia under the rule in Article 14(1) of the Country B Agreement. However, Article 14(2) of the Country B Agreement contains a general exception to the rule in Article 14(1). This exemption is known as the 'short-term visit exception'. For income to qualify for the short-term visit exception the following three conditions prescribed in Article 14(2) of the Country B Agreement must be satisfied: a) The recipient is present in Australia for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year of income of the Australian year of income; b) The remuneration is paid by or on behalf of an employer who is not a resident of Australia; and c) The remuneration is not deductible in determining the profits of a permanent establishment which the employer has in Australia. | Detailed Reasoning - Article 14(2): The second condition in Article 14(2) of the Country B Agreement relates to whether the remuneration is paid by or on behalf of an employer who is not a resident of Australia. The term 'employer' is not defined in this Agreement. The general definitions are contained in Article 3 of the Country B Agreement. Article 3(3) states: "... any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the laws of that State for the purposes of the taxes to which this Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State." The decision of Thiel v. Federal Commissioner of Taxation [1990] HCA 37 supports consideration of the Commentaries to the OECD (2017), Model Tax Convention on Income and on Capital: Condensed Version 2017 (OECD MTC) in interpreting tax treaties. The term 'employer' for the purposes of the short-term visit exception in provisions of Australia's tax treaties, equivalent to Article 15(2) of the OECD MTC, is undefined. Unless a particular tax treaty requires the term to have a different meaning, the term takes its meaning from Australian domestic law and the context, object and purpose of the short-term visit exception. The employer for the purposes of the short-term visit exception is the enterprise to which a non-resident individual renders his or her services in what would be considered an employment relationship. Paragraph 62 of Taxation Ruling 2013/1 Income tax: the identification of 'employer' for the purposes of the short-term visit exception under the Income from Employment Article, or its equivalent, of Australia's tax treaties (TR 2013/1), explains the object and purpose of those subparagraphs in the short-term visit exception containing the term 'employer' are set out in paragraph 6.2 of the Commentary to Article 15 of the OECD MTC as follows: The object and purpose of subparagraphs b) and c) of paragraph 2 are to avoid the source taxation of short-term employments to the extent that the employment income is not allowed as a deductible expense in the State of source because the employer is not taxable in that State as he neither is a resident nor has a permanent establishment therein. These subparagraphs can also be justified by the fact that imposing source deduction requirements with respect to short-term employments in a given State may be considered to constitute an excessive administrative burden where the employer neither resides nor has a permanent establishment in that State. Having regard to the object and purpose stated above, paragraph 63 of TR 2013/1 provides that the meaning given to 'employer' in the context of the Article seeks to ensure that the short-term visit exception does not apply in unintended situations. For example, this object and purpose would be defeated if: • the user enterprise is the employer and it deducts the payment to a non-resident intermediary (including the remuneration of the non-resident individual) as a cost incurred in carrying on business in the source country to earn assessable income for the purposes of section 8-1 of the ITAA 1997; and • the non-resident individual is not taxed in the source country on the remuneration he receives. Our view of 'employer' as contained in TR 2013/1 gives the meaning of the term 'employer' in the general exclusion provision provided under the Income from Employment Article in Australia's tax treaties. The ruling specifically applies to entities engaging non-resident individuals to render services in Australia and those non-resident individuals. It does not deal with income from employment dealt with by other Articles in Australia's tax treaties. To determine who is your employer, we consider indicators of your employment relationship arising from Australian domestic law as well as the context, object and purpose of the short-term visit exception provided for in the Country B Agreement. The relationship between an employer and employee is a contractual one often referred to as a contract of service. Whether such a contractual relationship exists is a question of law considering the totality of the relationship made between the various parties. In characterising the relationship between the parties, it is relevant to consider the express terms of the contract and the substance or reality of the contractual relations (in other words, the actual behaviour of the parties). This is often referred to as the 'substance over form' approach. This 'substance over form' approach applies in all cases to determine whether or not the relationship is properly one of employment, and to identify who the employer is. Under Australian common law and as listed in paragraph 13 of TR 2013/1, the key indicators listed below are considered in determining the employer for the purpose of the short-term visit exception: • who exercises ultimate control over the worker - the right to control in terms of the ability to withdraw a worker from an assignment and/or terminate the relationship with the worker • who exercises day-to-day control over the worker - that is, the degree of actual control exercised in terms of, for example, how, when and what is to be done • integration - the nature of the services rendered by the worker and whether they are an integral part of the business activities carried on by the enterprise to which the services are provided • the terms of engagement - for example, entitlements to leave and who has obligations to deduct PAYG instalments, pay superannuation contributions and workers' compensation insurance • who is responsible for payment of remuneration for the worker's services • who bears the responsibility or risk for the results produced by the worker • whether or not the contract is for the achievement of a specified result • who provides or maintains the necessary equipment and resources to perform the work. and • whether or not the work can be delegated by the worker. No one factor is determinative and not all factors will be relevant in a particular case. | Detailed Reasoning - Article 14(2)(a) - exceeds aggregate 183 days: You satisfy the first condition in Article 14(2)(a) as you were not in Australia for a period or periods exceeding in aggregate 183 days in any 12 month period commencing or ending in the years ended 30 June 20YY and 30 June 20YY. | Detailed Reasoning - Article 14(2)(b) - Short term visit exception: The next condition is whether the remuneration is paid by, or on behalf of, an employer in the other state. To determine who the employer is, we look to the factors as provided at paragraph 13 of TR 2013/1. Who exercises ultimate control over the worker - the right to control in terms of the ability to withdraw a worker from an assignment and/or terminate the relationship with the worker Paragraph 96 of TR 2013/1 explains from the cases including Stevens v. Brodribb [1986] HCA 1 at 27, per Mason J, Mason & Cox Pty Ltd v. McCann [1999] SASC 544 ( Mason and Cox ), Swift Placements and Drake , it is the ultimate or legal control over the individual non-resident, which is most relevant rather than practical control. Ultimate control would, amongst other things, enable the relevant entity to withdraw the worker from an assignment and terminate the contract with the worker. Your employment contract is with SG Co C, based and governed by the laws in Country C. The contract contains clauses that detail: • working time, scheduling and what happens if you fail to make yourself available • that your work location may be anywhere in the world • your fitness to work • notice periods including what happens in the event of gross or material breach of contract • reference to the company's disciplinary procedure, policies and your rights of review, • your compliance with all applicable laws regarding bribery and corruption • the need to satisfy and comply with the immigration requirements in any country where you are assigned to work and termination of your employment without notice or payment in lieu if you fail to meet the requirements. | Detailed Reasoning - Your circumstances - Ultimate control: The following Agreements, along with your Contract were considered for this factor. The Intercompany Agreement A stipulates SG Co C ( Employer ) supplies relevant offshore personnel services to SG Co B-E ( Crew Provider ), and SG Co B-E provides offshore personnel services in respect of the deployed personnel to other Group Company M entities that operate vessels and assets and requires offshore personnel to manage the project and/or the assets. The Intercompany Agreement A Standard Terms and Conditions relating to the Form of Agreement above which defines the employer as the relevant Group Company M payroll entity providing the services. The Intercompany Agreement B between SG Co B-D ( Company ) and SG Co B-E ( Crew Provider ). The company provides vessel chartering services to other Group Company M entities operating vessels for projects and needs offshore personnel to manage this. The crew provider supplies relevant offshore personnel and services to the company. SG Co C services include: • payroll services, administers all payroll, tax/social security for offshore personnel • they are responsible for complying with wage rates and terms and conditions of employment prescribed by an award, workplace agreement, industrial agreement, code, law of other requirement applicable to the offshore personnel In your ruling application you contemplated that although SG Co C holds the contractual rights to terminate your employment relationship with them, the following also requires consideration: • SG Co C is a GEC which serves the Group Company M providing labour for global projects as required, similar to that of a labour hire agency and TR 2013/1 contemplates: • where an intermediary firm performs an agency role to bring about a contractual relationship between the worker and the end user, the worker may be an employee of the user enterprise, not the intermediary, and • it defines 'international labour hire arrangements' to include circumstances where a non-resident individual(s) are either hired out or seconded to the user enterprise in Australia by a non-resident intermediary. In some instances, the non-resident intermediary may be the only intermediary. In others, there may be more than one intermediary. You submit SG Co Australia may be considered to have ultimate control as: • SG Co Australia holds the contract for the Australian Project • SG Co Australia is arguably the end user of your services, you provide technical support for the vessel while it is in Australian waters, on the premise the vessel crew are ultimately performing services for the benefit of SG Co Australia and based on SG Co Australia's project requirements • You must complete your work to a satisfactory standard or SG Co Australia may request someone else complete your role should they have concerns with your performance. However, you clarified this by stating that SG Co Australia does not directly monitor your performance, they monitor the operation of the vessel more broadly and they have no legal right to terminate your role. Any issues or concerns relating to your performance would be raised by SG Co Australia to SG Co C. Where performance management was necessary this would be managed by SG Co C and supported by the Position C-S. Input may be provided by SG Co Australia on their observations on your performance. SG Co Australia appears have some practical control over the work you do but does not appear to have ultimate control in terms of the ability to directly withdraw you from an assignment and/or to terminate your employment as your contract is with SG Co C. While it is not definitive, it appears SG Co C has more ultimate control over your work. Who exercises day-to-day control over the worker - that is, the degree of actual control exercised in terms of, for example, how, when and what is to be done An important factor to consider is the degree of control which an enterprise engaging an individual to perform work has over that individual in terms of what, how and where work is to be done. | Detailed Reasoning - Your circumstances - day to day control: SG Co C has control in where you work, the days contracted, scheduling, and requirement to comply with policies and immigration requirements. When the vessel is operational for the Australian project, the key day to day management and reporting is to and from the SG Co Australia onshore project management team, via Position D for project related activities. The Position D works with the OMT members to align and organise how the vessel, equipment and marine and project teams will be set up to deliver on the instructions from the Australian project management team. In practice, SG Co Australia has control of the actual project. They may exhibit some degree of control over the work that you actually perform, via instructions provided to Position D. However, the day to day control of your role, lays with the Position B an employee of SG Co C and the Position C-S employed by SG Co S-H. Integration - the nature of the services rendered by the worker and whether they are an integral part of the business activities carried on by the enterprise to which the services are provided It is relevant to consider the nature of the services rendered by the individual and whether they are an integral part of the business activities carried on by the enterprise to which the services are provided. In relation to international labour hire arrangements, it will not necessarily be inferred that the user enterprise is the employer for the purposes of the short-term visit exception merely because the work is being performed for the benefit of the user enterprise rather than the intermediary. In Swift Placements Pty Ltd v. Workcover Authority of New South Wales [2000] NSWIRComm 9, the Full Bench adopted and applied a passage from the judgment of Kitto J in Attorney-General for NSW v. Perpetual Trustee Co . ( Ltd ) [1952] HCA 2 which explained the essential elements of an employer-employee: ...the statement that the doing of work must be for the benefit of the master does not mean, of course, that the direct benefit from the work itself must necessarily accrue to the master; he may, without altering the relationship, direct his servant to do work which will benefit another. Accordingly, a non-resident individual engaged by an intermediary may be directed to work for the benefit of the user enterprise without the user enterprise becoming the employer for the purposes of the short-term visit exception. You explained Group Company M Global business is primarily the deployment of their chartered and high specification owned vessels to clients globally. The client offering includes offshore operations that are managed, crewed and operated by their onshore and offshore marine and construction personnel. | Detailed Reasoning - Your circumstances - Integration: The services rendered by you are under an employment contract with SG Co C. You report to Position B and Position C-S. The facts indicate the relationship is one of employment, not as an independent contractor carrying on a trade or business of his own. Your services are integral to the business activities of SG Co C, and more broadly to the Group Company M, and specifically SG Co S-H as Position C-S is responsible for the technical and operational aspects of the vessel. While employed by SG Co C, you do not directly provide services or activities that relate to SG Co Australia, nor do you operate, maintain or supervise operations of non-vessel related equipment for the execution of the offshore energy project. However, the nature of your services does to a degree impact SG Co Australia's business and its offering to their clients. As such, your services on balance are mainly integral to SG Co C, then broader to Group Company M while in Australian waters. Your services are integral to SG Co Australia to a lesser degree. Terms of engagement - for example, entitlements to leave and who has obligations to deduct PAYG instalments, pay superannuation contributions and workers' compensation insurance The actual terms and terminology in the contract will be of considerable importance to the proper characterisation of the relationship between the parties, particularly where the criteria are balanced. However, the way the arrangement between the parties is labelled in a written contract is not conclusive of the nature of the legal relationship. For example, in Forstaff and Ors v The Chief Commissioner of State Revenue [2004] NSWSC 573, McDougall J stated. If the facts were inconsistent with the parties' characterisation of their relationship, then the characterisation could not prevail. Terms of engagement also refers to such matters as length of assignment and the relevant role of the worker, rates of pay, workers compensation insurance, deduction of PAYG, superannuation contributions and other employee benefits. | Detailed Reasoning - Your circumstances - terms of engagement: There are two main entities in respect to this factor. Your employment conditions with SG Co C and the payment of income tax on your salary and employer superannuation contributions by SG Co Australia. Your payment summaries are lodged with the 'Payer' as SG Co C, under the ABN of SG Co Australia and other entities. You clarified: • SG Co Australia claims a tax deduction for the time-charter of vessel charged by SG Co B-D • SG Co B-D does not charge Marine Crew 'service rates' directly to SG Co Australia • SG Co B-D's Permanent Establishment (PE) in Australia is related to the vessel chartering activity during offshore periods of the projects here undertaken by SG Co Australia. It is the income generated by SG Co B-D from the time charters of the vessels to SG Co Australia which is attributable to the PE. • SG Co B-D incurs time services charges on the Marine Crew from SG Co B-E as part of the expenses attributable to the PE related to the specific vessel utilised in Australia and claimed as a deduction for Australian tax purposes. There are no payments made by SG Co Australia to SG Co C directly relating to your services. Your insurance is held by the Group Company M. The relevant facts show that there is interrelation between the entities on who is responsible for terms of engagement. However, SG Co Australia is responsible for deducting PAYG and paying superannuation which is a large factor however it is noted that if the answer to the ruling question was answered in the negative, then they would not be needing to do this. We also note that this factor needs to be balanced with the object and purpose of the provision as described in paragraph 62 of TR 2013/1 needs to be considered. This is considered further below. | Detailed Reasoning - Who is responsible for payment of remuneration for the worker's services: The identity of the entity paying remuneration to an employee for their work is a factor to consider in determining the identity of the employer. | Detailed Reasoning - Your circumstance - remuneration: It appears that SG Co C is responsible for the payment of your salary and wages which is made by SG Co C into your Country B bank account. As noted above and is a relevant factor here, SG Co Australia deducts PAYG and pays superannuation which forms part of your total remuneration, which is a requirement if it is concluded that the employment income is Australian sourced. | Detailed Reasoning - Who bears the responsibility or risk for the results produced by the worker: A key consideration of whether there is an employment relationship is who bears the responsibility or risk for the individual's work. We have referred to the following documents for this factor. • the Intercompany Agreement B between SG Co B-D ( Company ), and SG Co B-E ( Crew Provider ) with the Intercompany Agreement B Standard Terms and Conditions • the Intercompany Agreement C • the Time Charter Agreement - (ST 20YY document). The Standard Terms and Conditions relevant to the Intercompany Agreement C are in the ST 20YY document and are industry standard Terms and Conditions. Based on the sample copy of the ST 20YY document, we understand the 'Owner' according to the definition in clause x to mean Group Co X, the owner of the bare boat. As SG Co B-D leases the vessel from Group Co X under the bare-boat charter and then leases on the vessel to SG Co Australia under a 'time charter' arrangement, we understand the "Charterers' Group' to include SG Co B-D and SG Co Australia. | Detailed Reasoning - Your circumstances - risk: Your employment contract with SG Co C is governed by the Law in Country C. There are multiple entities in the wider group that have some risk in relation to the arrangement. Section 5 of the Standard Terms and Conditions for Intercompany Agreement B indicates no parties is liable for any indirect or consequential loss or damage. Furthermore, section 14(b) of the ST 20YY document indicates the Owners' Group and the Charterers' Group indemnify each other and no party is liable for any indirect or consequential loss or damage. As SG Co B-D leases the vessel from Group Co X under the bare boat charter, and then leases on the vessel to SG Co Australia under a 'time charter' arrangement, we understand the "Charterers' Group' to include SG Co B-D and SG Co Australia. In the event the vessel is unavailable for use due to repairs or maintenance SG Co Australia may not need to pay the time charter hire rate to SG Co B-D. The periods of breakdown are defined in the Rules document. Your services are not singled out, instead it is whether the vessel is operational or on breakdown. The time charter rate includes payment for your services. In the case of unsatisfactory performance, you would be paid in accordance with your employment contract, subject to any performance review process that would be initiated because of any unsatisfactory performance. SG Co B-D bears the risk when a vessel is not available and the hire rate is not paid. SG Co Australia bears the risk if the vessel is not operational in terms of not being able to deliver on the project requirements agreed with them and their clients. SG Co C appears to be only responsible for the risk if there is gross negligence or wilful misconduct or any action not authorised by the terms of the Agreement. Based on this, we consider this factor to be evenly balanced. | Detailed Reasoning - Whether or not the contract is for the achievement of a specified result: The notion of 'payment for result' is a strong (but not conclusive) indication that the contract is one for services, rather than of service. To the extent such a contract involves an employment relationship, who determines the results to be achieved is a factor to take into account in determining the identity of the employer. | Detailed Reasoning - Your circumstances - result: SG Co C selects, recruits and employs the Group Company M's global offshore workforce to supply labour requirements for offshore projects on a contracted 'days' basis rather than to achieve an agreed specific end result. SG Co C is your contracted employer and your Role Profile specifies key responsibilities and activities. You report to Position B and Position C-S. Group Company M has standard Role Profiles for each position which are consistent across the fleet. SG Co B-E is responsible for preparing the standard role profiles and SG Co C review and approve the documents. You are required to advise Position C-S, Position B and Position D where there are items of concern which may affect operation and production. This includes the permanent and auxiliary equipment. As Position A on the vessel, you ensure the vessel and all technical equipment/machinery etc installed on the vessel is appropriately maintained and operational, is integral to the success of the project. You are required to provide services and/or support as requested by Position B who you directly report to. While you report on a day to day basis to Position C-S, it appears SG Co Australia is the entity who ultimately determines the project requirements and the results to be achieved by the vessel and its crew. This factor is finely balanced between SG Co C and SG Co Australia. | Detailed Reasoning - Who provides or maintains the necessary equipment and resources to perform the work: The provision of assets, equipment and tools and the incurring of expenses and other overheads by an individual have been held to be an indicator that the individual is an independent contractor. However, the provision of necessary tools and equipment is not necessarily inconsistent with an employment relationship. | Detailed Reasoning - Your circumstances - equipment: You do not operate, maintain or supervise the operation of the non-vessel related equipment required for the execution of the offshore energy project. Nor do you undertake any activities which directly relate to the offshore energy project. SG Co Australia leases the vessels under a time charter agreement with SG Co B-D which grants SG Co Australia the use of the vessel, agreed marine crew (via SG Co C) and other operating services provided by SG Co B-D for a specified period. The local equipment is procured and managed by SG Co Australia/the local client for the execution of the work and often comes with dedicated technicians to operate this non-vessel related equipment. SG Co B-D procure and provide all vessel spare parts and maintenance requirements and keep the vessel classified for Class, Flag State & International Safety Management requirements. This factor is finely balanced due to the interconnections between the entities. | Detailed Reasoning - Whether or not the work can be delegated by the worker: The power to delegate or subcontract (in the sense of the capacity to engage others to do the work, or parts of the work) is a significant factor to determine whether a worker is an employee or an independent contractor. For example, if a worker is required contractually to perform work personally, then this is an indication that the worker is an employee. | Detailed Reasoning - Your circumstances: There is no evidence that you can delegate your employment responsibilities. You are responsible for the technical status of the vessel and your employment contract is with SG Co C. | Detailed Reasoning - The context, object and purpose of the short-term visit exception: Paragraph 65 of TR 2013/1provides that Australia's domestic law is not the only consideration in determining the meaning of the term 'employer' and as a consequence, the identity of the employer for the purposes of short-term visit exception. The context, object and purpose of the short-term visit exception, subparagraphs 2 (b) and (c) of the OECD MTC commentary in particular, are also to be considered in interpreting the term 'employer'. The OECD MTC commentary states in relation to subparagraphs b) and c) of paragraph 2 of Article 14: 6.2 The object and purpose of subparagraphs b) and c) of paragraph 2 are to avoid the source taxation of short-term employments to the extent that the employment income is not allowed as a deductible expense in the State of source because the employer is not taxable in that State as it neither is a resident nor has a permanent establishment therein. These subparagraphs can also be justified by the fact that imposing source deduction requirements with respect to short-term employments in a given State may be considered to constitute an excessive administrative burden where the employer neither resides nor has a permanent establishment in that State. We note that your salary and other employment costs are charged to SG Co Australia via the intercorporate recharge as part of the time charter agreement held with SG Co B-D. We understand SG Co Australia deducts these expenses in determining its taxable profit for Australian income tax purposes. On this basis, we are of the view that claiming an exemption under Article 14 would not be in keeping with the object and purpose of Article 14. | Detailed Reasoning - Conclusion to Article 14(2)(b) - Short term visit exception: While your employment contract is with SG Co C, there is a degree of control SG Co Australia has over your work. However, the factors are less obvious to conclude that SG Co Australia is in substance, your employer. On the one hand, there is a case: • in Position A you are only responsible for technical matters relating to the vessel and are not involved in the offshore project, being the SG Co Australia contract • you report to Position B who is employed by SG Co C • SG Co C has the ultimate legal control • you do not directly report to SG Co Australia • the equipment necessary for the work is on the vessel and not provided by SG Co Australia • you do not directly undertake any activities relating to the SG Co Australia project. On the other hand, there is a case that: • you are responsible for the equipment installed on the vessel, and you submit that these are "integral to the success of the project" • remuneration is indirectly charged to SG Co Australia based on internal management costing, which includes your salary costs. It is therefore finely balanced with who your employer is for the purposes of Article 14(2)(b). Having regard to the 'object and purpose' of Article 14 of the OECD MTC Commentary, an unintended consequence would be one where a deduction is allowed by user enterprise but the individual is not taxed on the remuneration in the source state. Therefore, we have reached the conclusion that your employer is SG Co Australia for the purposes of the short term visitor exception. This means your income will be taxed in Australia. | Detailed Reasoning - Article 14(2)(c) - Remuneration is not deductible in determining the profits of a Permanent Establishment which the employer has in Australia: This condition is not required to be analysed if the answer to the above condition is correct. However, if the conclusion establishes that your employer is SG Co C, the third condition requires that the remuneration isn't borne by a permanent establishment (PE) which SG Co C has in Australia. On the facts provided, SG Co C is not an Australian resident entity and does not have a PE in Australia. SG Co B-D has a PE in Australia which is related to the vessel chartering activity in Australia during offshore periods of the projects in Australia undertaken by SG Co Australia. The income generated by SG Co B-D arising from the time charter of vessels, in this case SG Co Australia, is attributable to SG Co B-D's PE. SG Co B-D incurs time service charges on the marine crew from SG Co B-E as part of the expenses attributable to the PE related to the specific vessel utilised in Australia. SG Co B-D does not charge 'marine crew service rates' directly to SG Co Australia. The marine crew costs form part of the time charter of the vessel. SG Co Australia is based in Australia and claims tax deductions for the 'time charter' of the vessel charged by SG Co B-D. SG Co Australia remits your PAYG withholding amount to us and makes superannuation guarantee contributions on your behalf based on your income considered to be Australian sourced. SG Co Australia bears these costs with some supporting administration for these payments performed by SG Co C. The lodgment of your payment summaries shows the 'Payer' as SG Co C however, the lodgment of the summaries with us is under the ABN of SG Co Australia and other entities. | Detailed Reasoning - Overall conclusion: You cannot claim the short-term visitor exception and your income may be taxed in Australia.