Private ruling: Exempt foreign employment income
Published: June 2014
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2013

Ruling: Q1: Are the salary and allowances you earned while employed overseas exempt from income tax in Australia? | A1: Yes

Relevant facts and circumstances: You are an Australian resident for income tax purposes. You have been deployed to work in an overseas country for a continuous period greater than 91 days. You are employed by an Australian Government Department. You will be engaged in foreign employment for more than 91 continuous days. There is a General Agreement on Development Co-operation between Australia and the overseas country that exempts the income from taxation in the overseas country. The overseas county normally taxes salary and wage income.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 23AG

Reasons for decision: Summary: 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 • 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. Given a consideration of the whole arrangement, it is accepted that you meet the above criteria and the income referable to your foreign service is exempt from income tax in Australia.