Private ruling: Foreign employment income
Date of advice: 12 August 2016
Published: September 2016
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Question and answer | Are you deployed as a member of a disciplined force whilst working overseas, as a non-ongoing employee under the supervision of a United Nations (UN) organisation? | No

Relevant facts and circumstances: You are an Australian resident for taxation purposes. You are a panel member of an Australian organisation's Disaster response cadre, and you are employed by an Australian Government Department. In 2016 you were employed as a non-ongoing of the Australian organisation for deployment to an overseas country, to provide specialist advice and services. You will be working under the supervision of a UN organisation based overseas, working on a refugee crisis, and you are providing specialist advice and management for a refugee camp, with frequent visits to the site near that countries border for wash activities, water supply, sanitation, health, education with an emphasis on children and mothers well-being for the camps which are run by a UN Refugee Agency. Whilst working overseas you will remain a non-ongoing officer of the Australian organisation.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 23AG | Tax and Superannuation Laws Amendment (2015 Measures No. 4) Act 2015

Reasons for decision: Summary: If you're an Australian resident for tax purposes, you pay tax in Australia on your employment income, such as salary, wages, commissions, bonuses and allowances earned from foreign service - unless it's exempt from Australian tax. From 1 July 2009, there's a limited exemption from income tax for foreign employment income from particular types of foreign service. Subsection 23AG(1) of the ITAA 1936 provides that where Australian resident individuals are engaged in foreign service for a continuous period of not less than 91 days, foreign earnings derived from that foreign service are exempt from tax in Australia. Subsection 23AG(1AA) of the ITAA 1936, which took effect from 1 July 2009, provides that those foreign earnings will not be exempt under section 23AG of the ITAA 1936 unless the continuous period of foreign service is directly attributable to any of the following: • delivery of Australian official development assistance by your employer; • activities of your employer in operating a public fund declared by the Treasurer to be a developing country relief fund, or a public fund established and maintained to provide monetary relief to people in a developing foreign country that has experienced a disaster (a public disaster relief fund); • activities of your employer as a prescribed charitable or religious institution exempt from Australian income tax because it is located outside Australia or the institution is pursuing objectives outside Australia; or • deployment outside Australia by an Australian government (or an authority thereof) as a member of a disciplined force. Chapter 2 of the Explanatory Memorandum to the Tax and Superannuation Laws Amendment (2015 Measures No.4) Bill 2015 (the EM) provides that from the 2016-17 income year and later income years, employees of an Australian government agency who are undertaking ODA in overseas employment for a period not less than 91 days are no longer exempt from income tax in Australia. As such, from 1 July 2016, Australian government employees who earn foreign income while delivering Australian official development assistance (ODA) will not be eligible for exemption from Australian income tax on their foreign employment income. The employees of the Australian organisation you will be working for overseas are employees of an Australian Government Department, but they are not classed as Australian Public Service employees. However members of a disciplined force, such as Australian Defence Force (ADF) and Australian Federal Police (AFP), delivering ODA will still be eligible for exemption from Australian income tax on their foreign employment income from 1July 2016. Taxation Ruling TR 2013/7 Income tax: foreign employment income: interpretation of subsection 23AG(1AA) of the Income Tax Assessment Act 1936 provides that the phrase 'disciplined force' refers to the Australian Defence Force (ADF), Australian Federal Police (AFP) and the State and Territory police forces. A person is 'deployed' if, and only if, they have been directed to perform duties overseas by the Commonwealth, a State or a Territory or an authority thereof in their capacity as a member of a disciplined force. From March 2016 you have been working for the Australian organisation under the relevant Australian Government Department, which is the employing authority of the Australian organisation, as a non-ongoing employee under the supervision of a UN organisation. You have not been deployed by the ADF, AFP or a State or Territory police force. Therefore your position as a non-ongoing employee is not classed as being deployed as a member of a disciplined force.