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Tax status of visiting academics

Australian Vice-Chancellors' Committee
Draft Taxation Ruling - Residency Status

The Australian Vice-Chancellors' Committee has sought clarification on a number of issues in draft taxation ruling TR98/D1, residency status of individuals entering Australia.

The requirements in relation to residency have not changed. Advice from the Australian Taxation Office indicates that as a general rule individuals who intend to stay in Australia for less than 6 months would not be regarded as residents. It further provides that individuals who intend to be in Australia for greater than 2 years will generally be regarded as residents for the period of their stay.

The intent of the revised ruling is to clarify the status of those staying between 6 to 24 months. The key test to be applied is whether the person is living their normal mode of life. The general position for international visitors pursuing their research andlor teaching, or for someone taking up a standard university position, is that they are following their normal mode of life (in contrast to having a holiday or pursuing constant travel) and hence would be regarded as residents for taxation purposes.

The following table sets out the taxation framework for residents and non residents, where there is no double taxation agreement with their home country.

With regard to the visitors' expenses, including those met by the host university, the Australian Taxation Office advises that many of those expenses are allowed as deductions. As such the 'otherwise deductible'rule will usually operate to reduce any Fringe Benefits Tax liability.

1. The payment of conference fees would be subject to FBT, but is likely to be otherwise deductible.
2. Generally the use of an employers, space and facilities would not be subject to FBT when used in the performance of the academics'employrnent. The provision of items such as mobile phones, fools of trade'. a briefcase, an electronic diary, protective clothing and a portable or laptop computer are exempt from FBT.
3. Accommodation and airfares would be subject to FBT, but may be deductible depending on the terms and circumstances of each individual's employment.
4. Meal and incidental allowances are likely to be assessable incorne of the individual, but deductions may be available for expenditure in relation to these items (eg. costs of certain expenses while attending an interstate conference).

The main problem stemming from the draft ruling, will be with visitors whose prime income is from their home country where there is no double taxation agreement covering academic income.

Countries with which Australia has a double tax agreement which specifically covers Professors and teachers' are:

• Japan
• Germany
• Sweden
• Ireland
• Thailand
• Fiji
• Hungary
• Poland
• Indonesia
• Netherlands
• France
• Belgium
• Philippines
• Malaysia
• Italy
• Korea
• China
• India

For visitors from those countries they will be taxed by their home country. However. it would be sensible to confirm the arrangements with the Australian Taxation Office in each relevant case.

The AVCC has raised its concerns in the attached letter to the Australian Taxation Office, stressing the need for more double taxation agreements and the potential adverse impact on our ability to attract international visitors in the meantime.

Stuart Hamilton

Executive Director

Australian Vice-Chancellors'Committee