Private ruling: Exempt income
Published: December 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: 1 July 2012.

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 working overseas. You are employed by a Government Agency. You are not treated as a diplomat, nor are you performing or in receipt of Australian Official Development Assistance. You will be engaged in foreign employment for more than 91 continuous days. There is an international tax agreement between Australia and the overseas country that exempts the income from taxation in the overseas country. There is no other taxation treaty between the Australian Government and the overseas country.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 23AG | Income Tax Assessment Act 1936 Section 23AG(1 ) | Income Tax Assessment Act 1936 Section 23AG(1AA ) | Income Tax Assessment Act 1936 Section 23AG(2 ) Reasons for decision | 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, 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. | As per subsection 23AG(1AA) of the ITAA 1936 your overseas employment is not directly attributable to your employers; | · delivery of Australian Official Development Assistance, | · operating a public fund, | · prescribed institutions e.g. various exempt entities, | · disciplined force Deployment. | As your overseas service does not satisfy subsection 23AG(1AA) of the ITAA 1936 you will not be eligible for exemption under section 23AG of the ITAA 1936. | Income for your foreign service is taxable in Australia.