Private ruling: Exempt foreign income
Published: August 2012
Ruling period: Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2009

Ruling: A1: Yes.

Relevant facts and circumstances: You are an Australian resident for tax purposes. Your employer is a prescribed institution for the purposes of regulation 50.50.02 of the Income Tax Assessment Regulations 1997 . Your employment is based in Country X. You have provided a timeline of work and travel movements for the years ended 30 June 2010, 2011 and 2012 in your private ruling application.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 23AG.

Reasons for decision: Summary: According to section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936), where a resident, being a natural person, has been engaged in foreign service for a continuous period of not less than 91 days, any foreign earnings derived by the person from that foreign service are exempt from tax, where the continuous period of foreign service is directly attributable to the activities of the person's employer, if the employer is exempt from income tax because of paragraph 50-50(c) or (d) of the Income Tax Assessment Act 1997 (ITAA 1997) (prescribed institutions located or pursuing objectives outside Australia). In your case, as your employer is a prescribed institution for the purposes of regulation 50.50.02 of the Income Tax Assessment Regulations 1997 , your employer is exempt from income tax because of paragraph 50-50(c) or (d) of the ITAA 1997. Subsection 23AG(6) of the ITAA 1937 states: A period during which a person is engaged in foreign service includes any period during which the person is, in accordance with the terms and conditions of that service: · absent on recreation leave, other than: · leave wholly or partly attributable to a period of service or employment other than that foreign service; · long service leave, furlough, extended leave or leave of a similar kind (however described); or · leave without pay or on reduced pay; or · absent from work because of accident or illness. Subsection 23AG(6A) of the ITAA 1936 states: Two or more periods in which a person has been engaged in foreign service are together taken to constitute a continuous period of foreign service until: · the end of the last of the two or more periods; or · a time (if any), since the start of the first of the two or more periods, when the person's total period of absence exceeds 1/6 of the person's total period of foreign service; · whichever happens sooner. Based on the timeline you have provided, your periods of foreign service for the years ended 30 June 2010, 2011 and 2012 can be taken together to constitute a continuous period of foreign service of more than 91 days, up until you ceased working in country X. Therefore, you meet all the requirements of section 23AG of the ITAA 1936 and your employment income is exempt foreign income.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Question and answer: Is your salary exempt foreign income?