Foreign salary and wage income derived by non resident

Is foreign salary and wage income derived by a taxpayer while a non resident of Australia assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

No. Foreign income derived by a taxpayer while a non resident of Australia is not assessable income under section 6-5 of the ITAA 1997.

The taxpayer lived and worked overseas for a number of years.

The taxpayer was a non-resident of Australia during the period they were overseas and received salary and wage income from an overseas source.

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. Statutory income from all Australian sources, or included by a provision on a basis other than having an Australian source, is also included in a non resident's assessable income under subsection 6-10(5) of the ITAA 1997.

Income derived by a non resident from sources outside of Australia (except where it is specifically included by a provision on a basis other than having an Australian source) is exempt from tax under paragraph 23(r) of the Income Tax Assessment Act 1936 (ITAA 1936).

The taxpayer is a non resident of Australia and the income was not paid from an Australian source. The income is not included in the taxpayer's assessable income on another basis, therefore the income will not be assessable under section 6-5 of the ITAA 1997. Paragraph 23(r) of the ITAA 1936 will apply to exempt from tax the income derived by the taxpayer.