Private ruling: Foreign employment income
Published: January 2014
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2013

Ruling: Question and answer | Are the salary and allowances you earned while employed overseas exempt from income tax in Australia? | No.

Relevant facts and circumstances: You are an Australian resident for income tax purposes. You are deployed to an overseas country as an advisor with a government department. You are not subject to specific department discipline, therefore, not under the command of the government department during the course of your deployment. You will be engaged in foreign employment for more than 91 continuous days and earning foreign earnings. The overseas country normally taxes salary and wage income. There is not a taxation treaty between the Australian Government and the overseas country.

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 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 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. In your case, your foreign service is not directly attributable to an activity listed in subsection 23AG(1AA) of the ITAA 1936 as you are not a 'member of a disciplined force'. You are not subject to specific department discipline, therefore, not under the command of the government department during the course of your deployment. Given a consideration of the whole arrangement, you do not meet the above criteria and the income referable to your foreign service is taxable in Australia.