Private ruling: Assessability of income
Published: November 2011
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer: | Is the income you receive while conducting academic research in Australia assessable income in Australia? | No.

Relevant facts and circumstances: You are a resident of another country. You have been appointed to a research position at an Australian university. Your research is not primarily for the benefit of a particular person or persons. You are not an Australian citizen. Your contract runs for approximately 1 year. You will be in Australia less than 2 years.

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 Income Tax Assessment Act 1936 (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 Agreement of your home country is listed in section 5 of the Agreements Act. The agreement is located on the Austlii website (www.austlii.edu.au) in the Australian Treaties Series database. The agreement operates to avoid the double taxation of income received by residents of Australia and your home country. Article 20(1) of the Agreement provides that where an individual employed in your field who is a resident of a that country 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 your home country. However Article 20(2) of the agreement provides that the income received for the research is not exempt where the research is undertaken primarily for the private benefit of a specific person or persons. In your case you came from your home country to Australia and commenced your research in the 2011-12 income year. You are currently working at an Australian university conducting research. You commenced working when you arrived and will finish after approximately 1 year. Additionally, the research you are conducting is not for the benefit of a specific person or persons. As such, you meet the requirements of Article 20(1) and Article 20(2) of the Agreement. Accordingly, the income you receive for the research undertaken is exempt from tax in Australia to the extent to which it is subject to tax in your home country. Therefore, the income you receive for research undertaken in Australia will not be assessable under section 6-5 of the ITAA 1997. | Detailed Reasoning - Please note:: If your plans change and you remain in Australia for longer than 2 years your income will be assessable in Australia.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.