Non-resident professor in receipt of Australian employment income

Is Australian sourced income received by a resident of France while researching in Australia, assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Yes. Australian sourced income received by a resident of France while researching in Australia is assessable income under section 6-5 of the ITAA 1997 as the taxpayer will be employed in Australia for a period exceeding two years.

The taxpayer is a professor in a French University.

The taxpayer will be employed in Australia as a medical research academic. The employer is an Australian research organisation. The taxpayer's salary is sourced in Australia.

The taxpayer's period of employment will exceed two years.

The taxpayer is not a resident of Australia for income tax purposes.

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.

Salary and wages 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).

Schedule 11 to the Agreements Act contains the double tax agreement between Australia and the French Republic (the French Agreement). The French Agreement operates to avoid the double taxation of income received by Australian and French residents.

Paragraph (1) of Article 14 of the French Agreement provides that salary and wages derived by a resident of France for employment exercised in Australia may be taxed in Australia.

However, this paragraph is subject to the conditions contained in Article 19 of the French Agreement. Article 19 of the French Agreement provides that a resident of France, who visits Australia for a period which does not exceed two years for the purposes of teaching or conducting research at a university, college, school or educational institution, will only be taxed in France.

As the taxpayer will be employed in Australia for a period exceeding two years, the conditions for Article 19 of the French Agreement to apply will not be met. Under Article 14 of the French Agreement, the salary and wages paid by the taxpayer's Australian employer may be taxed in Australia. Accordingly, the income will be assessable in Australia under section 6-5 of the ITAA 1997.