Private ruling: Assessability of income earned while on overseas deployment
Published: March 2014
Ruling period: 1 July 2013 to 30 June 2014
Date scheme commenced: 1 July 2013.

Ruling: Question and answer: | Is the income you earn while you are deployed overseas as a member of a disciplined force exempt from taxation in Australia under the provisions of section 23AG of the Income Tax Assessment Act 1936 ? | Yes.

Relevant facts and circumstances: You are an Australian resident. You have been deployed overseas by the Australian government as a member of a disciplined force engaged in foreign service for a period exceeding 91 continuous days. There is an agreement in place between the governments of Australia and the country you are serving in that exempts the income you earn while on deployment from being taxed in that country. You have not taken any form of leave from your deployment and you do not intend to take any form of leave until your deployment ceases.

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 in Australia 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 listed activities include being deployed overseas as a member of a disciplined force), 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 (the listed reasons include being deployed overseas as a member of a disciplined force. Based on the facts you have provided, it is accepted that you meet the criteria for the exemption under section 23AG of the ITAA 1936 to apply to you. Accordingly, the income you earn during that period of your deployment to the project will be exempt from income tax in Australia.