Private ruling: International income - 23AG
Date of advice: 12 December 2025
Published: 2 February 2026
Ruling period: Year ending 30 June 20YY | Year ending 30 June 20YY | Year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will your foreign employment income from a two-year contract as an Adviser on a DFAT-funded Australian Official Development Assistance (ODA) program be exempt under section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: Yes. Your foreign employment income is exempt under section 23AG, provided your annual leave and employer-required absences are within the guidelines and not excessive. However, discretionary remote work from Australia does not count as foreign service and will be assessable. The exemption remains subject to the 1/6 rule for out-of-country days.

Relevant facts and circumstances: You are an Australian tax resident. On DD Month YYYY, you entered into an employment contract with an employer to serve as Team Leader for a program delivered under Australia's Official Development Assistance (ODA), funded by the Department of Foreign Affairs and Trade (DFAT). You will be engaged as a full-time employee under the employment contract. Your employment duties will include the following: • providing strategic and operational leadership • managing budgets and overseeing financial aspects of the program • overseeing the completion and quality of program deliverables • engaging with and managing relationships with key stakeholders, including DFAT and XX • leading and supporting a diverse team to achieve program objectives. On DD MM YYYY, your employment under the contract will commence. The contract specifies a two-year term, ending on DD MM YYYY. On DD MM YYYY, you will depart Australia to commence your posting in Country A which will be your principal place of work for the duration of the contract. Your contract entitles you to five weeks of paid annual leave per year. You expect to spend approximately two weeks of this leave each year in Australia, with the remainder outside Australia. Your contract entitles you to five weeks of paid annual leave per year. You expect to take two weeks in Australia each year and three weeks outside Australia. Your contract also entitles you to up to eight weeks (40 working days) of remote work per year, which you may perform from Australia or another location outside Country A. You expect to work remotely from Australia for up to 30 working days per year, and from other locations for up to 10 working days per year. During periods of remote work, you will continue to perform all duties required by your position with no reduction in scope of responsibility. During all periods of leave and remote work, you will remain employed under the same contract and entitled to return to your duty station in Country A. Your employer is not an Australian government agency. You will remain an Australian tax resident for the duration of your posting. The program is governed by a Memorandum of Understanding between the Government of Australia and the Government of Country A, and your employment is subject to Country A Government Regulation regarding foreign workers. Under the terms of your contract and the relevant program agreements, you will not perform any work duties remotely from Australia or any location outside Country A except for periods of approved leave or remote work as specified in your contract.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1936 section 23AG