Private ruling: Foreign income tax exemption
Published: April 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: On or after 1 June 2012

Ruling: Question and answer | Are the salary and allowances you earned while employed overseas exempt from income tax in Australia? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are an Australian resident for income tax purposes. You are engaged on qualifying service in an overseas country for a continuous period that is greater than 91 days. You are employed by an Australian Government Department on an approved project. Section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936) does not apply to your circumstances. You are engaged as a contractor. You have supplied an official project number as issued by DFAT. There is taxation treaty between the Australian Government and the overseas country. The overseas country normally taxes salary and wage income. There is an agreement between Australia and the overseas country that exempts the income from taxation in the overseas country.

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

Reasons for decision: Summary: Subsection 23AF(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 qualifying foreign service, · the foreign service is for a continuous period of at least 91 days, · you derive eligible foreign earnings from that foreign service, · the foreign service is directly attributable to an approved project by the Trade Minister or a delegate of the Trade Minister, and is allocated an official project number, · the income is not excluded by 23AG of the ITAA 1936 or any other provision listed in subsection 23AF(17) of the ITAA 1936, 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. Given a consideration of the whole arrangement, it is accepted that you meet the above criteria and the income referable to your foreign service is exempt from income tax in Australia.