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If you are an Australian resident for tax purposes, you pay tax in Australia on your employment income, such as salary, wages, commissions, bonuses and allowances earned from foreign service unless it is exempt from Australian tax. From 1 July 2009, there is a limited exemption for foreign employment income from particular types of foreign service.
Your foreign employment income is exempt from tax if all of the following applies:
If your foreign service is not directly attributable to these activities, you will need to include the foreign employment income in your tax return as assessable income.
You may be entitled to a foreign income tax offset for amounts of foreign tax you have paid.
Australian official development assistance (ODA) is assistance delivered through the Australian Government's overseas aid program that is administered by the Department of Foreign Affairs and Trade (DFAT).
DFAT also contracts aid work to Australian and international entities. As a result, individuals involved in the delivery of Australian ODA can include both Australian Public Service (APS) employees and non-APS employees.
Michelle is an Australian resident employed by DFAT. She is posted to the Solomon Islands for 150 continuous days as a project advisor on an Australian ODA project aimed at improving the quality of early childhood education.
Michelle's foreign service is directly attributable to the delivery of Australian ODA by her employer. Therefore, the foreign employment income she earns during this period is eligible for the exemption, subject to the non-exemption conditions.
Eric is an Australian resident motor mechanic employed by Nordic Engineering Pty Ltd, a private company contracted by DFAT to provide vocational training in Vanuatu. He is posted to Vanuatu for 180 continuous days.
Eric's foreign service is directly attributable to the delivery of Australian ODA by his employer. Therefore, his foreign earnings are eligible for exemption, subject to the non-exemption conditions.
Jamie is an Australian resident member of the Australian Civilian Corps who has been deployed to Papua New Guinea to provide specialist assistance. She is deployed to Papua New Guinea for 96 continuous days.
Jamie's foreign service is directly attributable to the delivery of Australian ODA by her employer. Therefore, the foreign employment income she earns during this period is eligible for the exemption, subject to the non-exemption conditions.
A developing country relief fund is a fund established by an organisation solely for the purpose of providing relief to people of a developing country.
The organisation must be an approved organisation as declared by the Minister for Foreign Affairs and the country must be a developing country as declared by the Minister for Foreign Affairs.
Maria is a social worker employed by Peace Group, a charitable organisation that provides assistance to developing countries. Maria is posted to Nigeria for 120 days to help provide relief to people in distress.
Peace Group is an organisation that has been approved as operating a developing country relief fund. This means Maria's foreign employment income is eligible for the exemption.
A public disaster relief fund is a fund established and operated by a public benevolent institution in response to an event recognised as a disaster by the Minister for Foreign Affairs.
If you are unsure of whether you work for a developing country relief fund or a public disaster relief fund, you should seek advice from your employer.
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