Exempt Income: Director of US company visiting Australia

Is the income derived by the taxpayer, director of a United States of America (US) resident company in respect of personal services performed by its director in Australia, exempt from income tax under subparagraph 23(c)(iv) of the Income Tax Assessment Act 1936 (ITAA 1936)?

No. The income derived by the taxpayer, director of a US resident company in respect of personal services performed by its director in Australia, is not exempt from income tax under subparagraph 23(c)(iv) of the ITAA 1936.

The director of a US resident company provides specialised training to the staff of a state government department at a number of venues in Australia under a contract between the government department and the US company.

The services provided by the director involve the provision of training to the department's staff with a view to advance their skills in carrying out their duties.

The US company is not a society or association established for educational, scientific, religious or philanthropic purposes.

The state government department makes payments for the personal services rendered by the director in Australia.

Subparagraph 23(c)(iv) of the ITAA 1936 exempts income of a person visiting Australia in the capacity of representative of any society or association established for educational, scientific, religious or philanthropic purposes for attending international or Commonwealth conferences or for the purpose of carrying on investigation or research for such society or association.

Subparagraph 23(c)(iv) of the ITAA 1936 will not apply as the US company is not a society or association established for educational, scientific, religious or philanthropic purposes. The purpose of the visit by the director was to provide training courses to the state government department staff and was not to attend an international or Commonwealth conference or to carry on investigation or research for such society or association.

Accordingly, the income derived by the taxpayer, director of a US resident company in respect of personal services performed in Australia, is not exempt from income tax under subparagraph 23(c)(iv) of the ITAA 1936.