Private ruling: Assessability of income earned while on deployment with a disciplined force
Published: April 2014
Ruling period: 1 July 2013 to 30 June 2016.
Date scheme commenced: 1 July 2013.

Ruling: Question and answer: | Is the income you earn from your deployment overseas as a member of a disciplined force exempt from income tax 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 an authority of the Commonwealth of Australia as a member of a disciplined force. You are deployed to a non diplomatic position. The position you are deployed to constitutes foreign service for the purposes of section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936). You will be undertaking continuous foreign service for a period exceeding 91 days. There is an agreement in place between the government of Australia and the government of the country you are deployed to that specifically exempts the income you earn on deployment from being taxed in the country you are deployed to. For the duration of your deployment do not expect to take any form of leave other than recreation leave that accrues during your deployment.

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). • The foreign earnings must not be covered by subsection 23AG(2) of the ITAA 1936, the provisions of which make certain foreign earnings not exempt under section 23AG of the ITAA 1936. 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 from your deployment overseas is exempt from income tax in Australia.