Private ruling: Exempt income
Date of advice: 1 October 2025
Published: 24 November 2025
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: XX XXXX 20XX

Ruling: Q1: Are the Comcare payments you received between XX XXXX 20XX to XX XXXX 20XX, to replace your foreign sourced income exempt from taxation in Australia under section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: Yes. In this case, we have determined that your employment income was covered by section 23AG of the ITAA 1936 . After your injury, the Australian Review Tribunal (ART) ruled that your posting would have been extended to XX XX 20XX, if not for your injury suffered on XX XX 20XX while on overseas deployment. In line with this decision, your Comcare income will continue to be exempt under 23AG of the ITAA 1936 until XX XX 20XX. However, this decision is based on the facts relating to your particular situation and cannot automatically be applied to other taxpayers who work remotely overseas. Each situation must be considered on a case-by-case basis by weighing up the importance of the various factors.

Relevant facts and circumstances: You are an Australian tax resident. You were employed by Australian Federal Police (AFP) as an advisor to the Country A's police force. For a period, you were contracted to be posted in Country A to deliver the program. Your management could extend your contract X times for X year at a time, ending your contract on XX XXXX 20XX. In addition to your salary and wages you received the following allowances: • Flexibility allowance. • Overseas allowance. • Location allowance. • Cost of living allowance. You received payment of your allowances fortnightly. On XX XXXX 20XX, you were deployed to Country A. You worked alongside senior members of the Country A police assisting in policing policies, organisational structuring, education and training, logistics and programming. You posting was covered by the Agreement between the Government of Australia and the Government of Country A Concerning the Basis of Deployment of Police, Armed Forces and other Personnel to Country A (the Agreement). Under article XX of the Agreement, Country A provides an exemption for income tax, where it states: Article XX Costs, Remittances and Personal Taxation (1) Except where otherwise provided in this Agreement, Australia and any Third States shall be responsible for the costs arising from a Deployment of a Visiting Contingent under this Agreement. (2) Remittances from the Area of Operations shall be freely allowed for: (a) funds derived by members of a Visiting Contingent; (b) funds derived by members of a Visiting Contingent from sources outside the Area of Operations, subject to any relevant laws, regulations or policies of Australia or a Third State; (c) funds derived from the proceeds of sales of personal effects or other property used by members of a Visiting Contingent while serving in the Area of Operations, which are disposed of in connection with their departure from the Area of Operations. (3) Members of a Visiting Contingent shall be exempt from taxation by Country A on their pay and other emoluments and from any other direct taxes (including death duties), fees and charges. Your posting met the requirements of section 23AG of the ITAA 1936. On XX XXXX 20XX, you suffered a physical injury due to a fall whilst under-taking an approved work-related task. This was a re-injury of a previous work-related claim from XX 20XX. On XX XXXX 20XX, you were repatriated to Australia for treatment. Upon your return to Australia, you no longer received the cost of living allowance. On XX XXXX 20XX, you suffered a psychological injury, which is an accepted claim by Comcare. Your compensation payments cover the difference between the base pay you continued to receive from your employer upon returning to Australia and the higher amount you would have received if your foreign service had continued. Whilst on leave you also received your mission allowance. On XX XXXX 20XX, you received an email from the AFP payroll, that your pay conditions would be returning to EA pay and no longer tax free. On XX XXXX 20XX, in accordance with the notification from payroll on the XX XXXX 20XX, your pay was reverted to EA standards. You requested reconsideration from Comcare to pay the difference, on the basis that if you were not injured during your mission, you would still be in Country A under an extended contract until XX XXXX 20XX. Comcare stood by the decision to reduce your normal weekly earnings based on the advice from the AFP. On XX XXXX 20XX, you lodged a reconsideration with the Australian Review Tribunal (ART). On XX XXXX 20XX, you were medically discharged from the AFP due to your injuries. From XX XXXX 20XX, you started to receive your compensation payments directly from Comcare, which were taxed and received on a fortnightly basis. On XX XXXX 20XX, you were successful in the ART in appealing the Comcare determination. Your deployment was extended to XX XXXX 20XX based on the ART decision. In XXXX 20XX, you received the backpay from Comcare for allowances dating back to XX XXXX 20XX. Tax was withheld from this amount. On XX XXXX 20XX, your overseas allowances will cease. However, you will continue to receive income compensation payments at XX% of your base pay due to your injuries and not being able to work. After your injury you have not returned to work.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) | Income Tax Assessment Act 1936 section 23AG | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 subsection 6-15(2) | Income Tax Assessment Act 1997 section 6-20 | Income Tax Assessment Act 1997 section 11-15