Private ruling: Exempt foreign income
Date of advice: 13 September 2018
Published: October 2018
Ruling period: July 2016
Date scheme commenced: January 2015

Ruling: Q1: Is your salary and wage income exempt from Australian income tax under section 23AG of the Income Tax Assessment Act 1936 for the period of your foreign service? | A1: Yes Having considered your circumstances, the relevant legislation and taxation rulings/determinations surrounding the exemption of taxation on foreign service income, we find that under section 23AG of the Income Tax Assessment Act 1936 your foreign service income will be exempt from taxation.

Relevant facts and circumstances: You were employed by an Australian government agency. Your work related solely to official development assistance. You were posted in Country X for a total of more than 500 days. You took various holidays during your deployment. You used your entitled annual leave to take these holidays. You used five days of annual leave you had accrued prior to your foreign service for your first holiday. You were granted an additional 10 days of leave attributed to your foreign service posting. All the holidays you took were accrued from foreign services in accordance to your employment terms and conditions. Your salary and wage income was exempt from tax in Country X by operation of the Country A Convention on Diplomatic Relations [1968] ATS 3. Your salary and wage income was exempt from tax in Country X by operation of a treaty between Australian and Country X. Your deployment dates are shown in the table below: Country Purpose Days Cumulative (Days) X foreign service 58 58 AUS Accrued foreign service Recreational Leave (FSRL) 13 76 AUS Leave accrued before foreign service 5 76 X foreign service 86 162 AUS FSRL 10 172 X foreign service 16 188 AUS foreign service work travel 5 193 X foreign service 58 251 AUS foreign service work travel 2 253 X foreign service 26 279 AUS foreign service work travel 3 282 X foreign service 14 296 AUS FSRL 7 303 X foreign service 25 328 Y FSRL 24 352 X foreign service 52* 404 AUS foreign service work travel 4 408 X foreign service 13 421 AUS FSRL 9 430 X foreign service 42 472 AUS foreign service work travel 4 476 X foreign service 44 520 *Leap year 29 days in February

Relevant legislative provisions: Income Tax Assessment Act 1936 section 23AG | Income Tax Assessment Act 1936 subsection 23AG(1) | Income Tax Assessment Act 1936 subsection 23AG(1AA) | Income Tax Assessment Act 1936 subsection 23AG(2) | Income Tax Assessment Act 1936 subsection 23AG(6) | Income Tax Assessment Act 1936 subsection 23AG(6A)