Private ruling: Exemption of income earned in overseas employment
Date of advice: 20 December 2024
Published: 28 January 2025
Ruling period: Period end 30 June 20XX | Period end 30 June 20XY | Period end 30 June 20XZ
Date scheme commenced: 1 May 20XX

Ruling: Q1: Am I eligible for the exemption from Australian Income Tax for income I earned in overseas employment as an Australian resident under section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936). | A1: Yes. You are eligible for the exemption under section 23AG(1) of the ITAA 1936. Note that an amount of foreign earnings derived in a foreign country is not exempt from tax pursuant to section 23AG(2), subsections (a) to (g), if the amount is exempt from income tax in the foreign country only because of the conditions listed in (a) to (g). In your case, these conditions do not apply to your situation.

Relevant facts and circumstances: You are an Australian for taxation purposes. You have been engaged in continuous foreign service for a period of 91 days or more. Your foreign income earnings have been received on or after 1 July 2009. You are employed in the delivery of an Australian Official Development Assistance Project which is contracted by an Australian Government Agency. You confirmed that the project was not an Approved Overseas Project. You have been living in Country A since May 20XX and are expected to remain there until completion of the project in March 20XZ. You currently pass the one-sixth test and/or any absences count as foreign service. Company A is your employer and is the principal contractor in the YY Healthcare Centre, a project funded by the Department of Foreign Affairs and Trade (DFAT) and Australian Aid (Aus Aid). You have provided me with a letter from Person A, Senior Project Manager - Building Infrastructure Programme, dated XX XX 20XX. The letter confirms that: • you are currently stationed in the Country A where you are expected to fulfil duties as Senior Project Coordinator from commencement of work in May 20XX until the anticipated completion of the project in early 20XZ. • the project is an Australian Government-Funded Project in Country A • you are employed by Company A, a construction contractor engaged by Company B, on behalf of the Australian Department of Foreign Affairs and Trade (DFAT) under Australian Government funding. During a recent phone call, you confirmed that: • the program is an Australian Official Development Assistance Project as compared to an Approved Overseas Project, of which foreign income may be exempt from income tax under section 23AF of the ITAA 1936, and which is separate to the foreign employment exemption under section 23AG of the ITAA 1936 • you are an Australian resident for taxation purposes.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 23AG(1)