Private ruling: Foreign income
Published: November 2013
Ruling period: Year ending 30 June 2012, | Year ending 30 June 2013, | Year ending 30 June 2014, | Year ending 30 June 2015.
Date scheme commenced: 1 July 2011.

Ruling: Questions and answers | 1. Is the salary you earned while engaged overseas exempt from income tax in Australia? | No. | 2. Will the salary and allowances you will be receiving while engaged overseas exempt from income tax in Australia? | No.

Relevant facts and circumstances: You are an Australian resident for income tax purposes. You were engaged overseas as a contractor. Australian was a donor to the project you were involved with. You have provided a project id relating to your foreign service. This is not an approved project id. You will be engaged in foreign employment for more than 91 continuous days. You now intend to be engaged overseas as a member of the X and will be paid by Australian aid. There are no agreements between Australia and the overseas countries that exempts the income from taxation in the overseas country. There is no taxation treaty between the Australian Government and the overseas countries.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 23AG | Income Tax Assessment Act 1936 Section 23AG(1) | Income Tax Assessment Act 1936 Section 23AG(1AA) | Income Tax Assessment Act 1936 Section 23AG(2) | Income Tax Assessment Act 1936 Section 23AF | Income Tax Assessment Act 1936 Section 23AF(1) | Income Tax Assessment Act 1936 Section 23AF(17)

Reasons for decision: Detailed Reasoning - Exemption Of Income Earned In Overseas Employment: Subsection 23AG(1) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that foreign earnings are exempt from income tax where all of the following requirements are satisfied: · you are a resident of Australia and a natural person, · you are engaged in foreign service, · the foreign service is for a continuous period of at least 91 days, · you derive foreign earnings from that foreign service, · the foreign service is directly attributable to an activity that is listed in subsection 23AG(1AA) of the ITAA 1936, and · the foreign earnings are not exempt from income tax in the foreign country only because of one of the reasons listed in subsection 23AG(2) of the ITAA 1936. | Detailed Reasoning - Overseas country X: You were engaged in an overseas country X as a contractor. Subsection 23AG(7) of the ITAA 1936 defines foreign service as service in a foreign country as the holder of an office or in the capacity of an employee. Your foreign engagement as a contractor will not meet the definition of foreign service for the purposes of 23AG of the ITAA 1936. You will not be exempt under 23AG of the ITAA 1936. | Detailed Reasoning - Overseas country Y: You intend to be engaged in a overseas country Y as a member of the X. You will not be taxed in overseas country and have not been able to provide a tax agreement or memorandum of understanding. There is no Double Tax Agreement between Australia and the overseas country. As such, subsection 23AG(2) is not satisfied. You will not be exempt under 23AG of the ITAA 1936. | Detailed Reasoning - Exemption Of Certain Income Derived In Respect Of Approved Overseas Projects: Subsection 23AF(1) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that foreign earnings are exempt from income tax where all of the following requirements are satisfied: · you are a resident of Australia and a natural person, · you are engaged in qualifying foreign service, · the foreign service is for a continuous period of at least 91 days, · you derive eligible foreign earnings from that foreign service, · the foreign service is directly attributable to an approved project by the Trade Minister or a delegate of the Trade Minister, and is allocated an official project number, and · the income is not excluded by 23AG of the ITAA 1936 or any other provision listed in subsection 23AF(17) of the ITAA 1936. | Detailed Reasoning - Overseas country: You were engaged in overseas as a contractor. You have provided a project id relating to your foreign service. This is not an approved project id. You will not be exempt under 23AF of the ITAA 1936.