Private ruling: Foreign employment income
Date of advice: 6 December 2018
Published: March 2019
Ruling period: For the financial year ended 30 June 20XX | For the financial year ended 30 June 20XX | For the financial year ended 30 June 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Does your employment contract meet the definition of part-time as per Taxation Determination TD 2012/8? | A1: Yes. In accordance with the terms of your foreign service, absences are permitted by your employer. You are therefore treated as being engaged in foreign service on days off due to your part-time arrangements with your employer. | Q2: Is income from your employment on an Australian government aid program in Papua New Guinea exempt from income tax in Australia under section 23AG of the Income Tax Assessment Act 1936 ? | A2: Yes Section 23AG of the ITAA 1936 provides that foreign earnings are exempt from income tax in Australia 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. 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 and thus, not assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997).

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. You were employed under a Agreement to work in Country A. Your foreign service is directly attributable to the delivery of Australian Official Development Assistance. Initially your Agreement was for 91 working days. The Agreement was extended for another period greater than 91 days. Your position was part time where you worked in 3-4 week blocks. You returned to Australia when not working. Whilst in Australia you undertook some work programs related to employment agreement. This accounted for 23 days of the working days. Your employer commenced withholding tax in the 20XX calendar year. You did not work for another employer whilst in Australia.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 23AG | Income Tax Assessment Act 1997 Subsection 6-15(2) | Income Tax Assessment Act 1997 Subsection 6-5(2)