ATO Interpretative Decision
ATO ID 2002/584 (Withdrawn)
Resident of Germany in receipt of Australian employment income - present in Australia for a period exceeding 183 days
FOI status: may be released
||This ATO ID is withdrawn. Guidance on the issue contained in this ATO ID can be found at What income you pay tax on (QC 33208).
||This document has changed over time. View its history.
Status of this decision: Decision withdrawn 23 February 2018.
|CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.|
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Is the Australian sourced employment income received by a resident of Germany assessable income under subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) where they are present in Australia for a period exceeding 183 days.
Yes. The Australian sourced employment income received by a resident of Germany is assessable income under subsection 6-5(3) of the ITAA 1997 where they are present in Australia for a period exceeding 183 days.
The taxpayer is a resident of Germany and a non resident of Australia for taxation purposes.
The taxpayer is present in Australia for a period exceeding 183 days in the Australian income year.
The taxpayer is performing employment duties in Australia but their salary and wages continue to be paid by their employer in Germany.
Although they are doing research work while in Australia the taxpayer is not a professor or teacher.
Reasons for Decision
Subsection 6-5(3) of the ITAA 1997 provides that ordinary income derived by a non resident directly or indirectly from Australian sources, as well as other ordinary income included by a provision on a basis other than having an Australian source, is assessable.
The salary and wages received by the taxpayer are ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997.
In determining liability to tax on Australian sourced income received by a non resident, it is necessary to consider not only the income tax laws but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (the Agreements Act).
Section 4 of the Agreements Act incorporates that Act with the ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited provisions).
Schedule 9 to the Agreements Act contains the double tax agreement between Australia and Germany (the German Agreement). The German Agreement operates to avoid the double taxation of income received by Australian and German residents.
Article 14 of the German Agreement deals with dependant personal services. Paragraph (1) of Article 14 of the German Agreement provides that employment income derived by a resident of Germany shall be taxable only in Germany unless the employment is exercised in Australia. If the employment is exercised in Australia then the income may also be taxed in Australia.
Paragraph (2) of Article 14 of the German Agreement provides that the income will be exempt from tax in Australia if:
- the taxpayer is present in Australia for a period or periods not exceeding in the aggregate 183 days in the Australian year of income; and
- the remuneration is paid by or on behalf of an employer who is not a resident of Australia; and
- the remuneration is not borne by a permanent establishment or a fixed base which the employer has in Australia.
The taxpayer was present in Australia for a period in excess of 183 days in the income year and therefore the exemption under paragraph (2) of Article 14 of the German Agreement will not apply.
Accordingly, the taxpayer will be assessable under subsection 6-5(3) of the ITAA 1997 on the employment income received.
Date of decision: 10 April 2002
|Year of income:||Year ending 30 June 2002|
| ||Year ending 30 June 2003|
Income Tax Assessment Act 1997
International Tax Agreements Act 1953
Schedule 9, Article 14
Schedule 9, Article 14(1)
Schedule 9, Article 14(2)
Double tax agreements
Non resident individuals
Salary and wages income
Business Line: Small Business/Individual Taxpayers
Date of publication: 31 May 2002
|ATO ID 2002/584 (Withdrawn) history