Private ruling: Temporary absence - 23AG
Published: July 2014
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 June 2014

Ruling: Q1: Does the temporary absence from your foreign service form part of a continuous period of foreign service under section 23AG of the Income Tax Assessment Act 1936? | A1: Yes

Relevant facts and circumstances: You are an Australian resident for taxation purposes. You have been deployed to an overseas country on a project funded by AusAID. You will be employed by an Australian company while working on the project. Your first deployment is for X days. You then returned to Australia for Y days for a combination of recreation leave attributed to the period of foreign service, TOIL, weekends and to attend a course associated with the overseas project. The recreation leave was leave accrued as a result of your foreign service in the overseas country. Your second deployment is for Z days.

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

Reasons for decision: Summary: A period during which a person is engaged in foreign service for the purpose of section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936) includes a temporary absence from that service if, and only if, the absence is within the scheduled period of foreign service and is both: • in accordance with the terms and conditions of that foreign service and for any of the following reasons: • recreation leave on full pay that is attributable to the period of foreign service; • because of an accident or illness of the taxpayer; • because of an accident of illness of a person other than the taxpayer, including the death of another person; or • in the course of carrying out either duties or training required by the employer under a continuing foreign service engagement (that is, work related trips directly related to the foreign service) provided the absences are not excessive by comparison with the scheduled period of foreign service. Taxation Determination TD 2012/8 deals with the practical application of section 23AG of the ITAA 1936. Paragraph 6 provides the following: 'A person is not treated as absent from foreign service on days such as weekends, public holidays, rostered days off, day off due to part time arrangements, flex-days, compulsory lay off/over days, grounded days and days off in lieu where those days are part of the normal working conditions for the foreign service. This is the case regardless of whether these days are spent in the country where the person is performing the foreign service of in Australia or a third country. | Detailed Reasoning - Application to your circumstances: Your first period of foreign service was for X days. You then returned to Australia for Y days. The Y days spent in Australia were a combination of recreation leave attributed to the period of foreign service, TOIL, weekends and work related. Your second period of foreign service is for Z days. As the Y days spent in Australia were days that can be treated as part of a continuous period of foreign service under subsection 23AG(6), the days are not excluded by paragraph 23AG(6)(a) and these days are treated as part of a continuous period of foreign service. Therefore, the temporary absence from your foreign service forms part of a continuous period of foreign service under section 23AG of the Income Tax Assessment Act 1936.