DT2660 - Particular agreements: Australia: Teachers and non residents

The new Agreement applies from 6th April 2004 for UK income tax. It contains no special provision for teachers or professors. Their earnings should be dealt with in the normal way, see DT2659.

For anyone already in the other territory when the new Agreement starts to apply, there is transitional relief. The exemption from host country taxation provided in the old agreement may apply up to the time when it would have ceased if the old agreement had remained in force.

This is because the previous agreement contained a Teachers Article (see DT 2715). Under this, a teacher or professor who:

• visited the UK for 2 years or less;
• in order to teach at a university, college, school or other educational institution in the UK;
• and who is, or was immediately before that visit, a resident of Australia;

was exempt from tax in the UK on any earnings for such teaching in respect of which he is subject to tax in Australia. And the same was true in reverse for UK individuals going to Australia to teach.

For periods up to 17th March 1998, any earnings excluded from United Kingdom tax by virtue of a foreign earnings deduction provided by ICTA88/S193 are regarded as exempt from and NOT subject to tax. Where a United Kingdom teacher visiting Australia requires evidence that their remuneration is subject to tax in the United Kingdom for production to the Australian authorities, their Tax Office should provide them with a letter on headed note paper, signed by an Inspector, certifying the gross amount of assessable earnings and, if appropriate, the amount of any foreign earnings deduction under ICTA88/S193. Any earnings not charged to United Kingdom tax because of the foreign earnings deduction will be liable to Australian tax, even where the period of the visit did not exceed two years.

As regards credit for any Australian tax so paid, see DT2659, last sub-paragraph.