Private ruling: Exemption of income earned in overseas employment
Published: January 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 26 June 2012

Ruling: Q1: Will your income earned in overseas employment be exempt from Australian tax under section 23AG of the ITAA 1936? No

Relevant facts and circumstances: You indicate that you are an Australian resident for the period of this ruling. You employer is a non-government organisation that provides emergency assistance to communities devastated by conflict or major natural disasters by providing personnel to humanitarian relief programs. As an employee you worked overseas for a continuous period of more than 91 days to work in support of a relief program between for a period of time. You were paid in Australia. You state you were you an employee engaged in foreign service for an employer operating a developing country relief fund satisfying paragraph 23AG(1AA)(b) of the Income Tax Assessment Act 1936 You advise, as you were not a resident of the overseas location and your income was not foreign sourced, you were not liable to pay income tax in the overseas location as you were considered an "expert on mission" in accordance with the Convention on the Privileges and Immunities of the Specialized Agencies, adopted by the United Nations General Assembly on 21 November 1947.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 23AG | subsection 23AG(1AA) | subsection 23AG(2)

Reasons for decision: Summary: Subsection 23AG(1) of the ITAA 1936 provides that, where Australian resident individuals are engaged in foreign service for a continuous period of not less than 91 days, foreign earnings derived from this foreign service are exempt from Australian tax. Subsection 23AG(1AA) of the ITAA 1936, restricts the exemption to specific employment activities. It states: As your employer is a charitable organisation operating a developing country relief fund covered by item 9.1.1 of the table in subsection 30-80(1) the ITAA 1997, you will satisfy paragraph 23AG(1AA)(b) of the ITAA 1936 provided your foreign service is directly related to aid or charitable activities undertaken by your employer in operating the developing country relief fund. The exemption from Australian tax for foreign service may be denied under section 23AG(2) of the ITAA 1936 if the income is exempt from income tax in the foreign country solely because of: · a double tax agreement · the foreign country does not tax employment income, or · a law or agreement dealing with diplomatic privileges and immunities. · an international agreement that deals with privileges and immunities for international organisations. You were not taxed in the overseas location as you were considered an "expert on mission" in accordance with the Convention on the Privileges and Immunities of the Specialized Agencies, adopted by the United Nations General Assembly on 21 November 1947. As you did not pay tax in the overseas location pursuant to an international agreement exclusion, your income is thereby taxable in Australia as ordinary income.

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