Foreign employment income and section 23AG - employees

Overview

Within this publication 'foreign resident' is the same as 'non-resident'

If you work overseas continuously for 91 days or more, this information may apply to you.

Australian residents for tax purposes are taxed on their worldwide income, so if you have foreign employment income, including salary, wages, commission, bonuses allowances or you receive non-cash benefits, you may need to include it in your tax return.

If you have paid tax in another country, you may be entitled to claim a foreign income tax offset (FITO) in your Australian tax return, which provides relief from double taxation.

Foreign earnings derived on or after 1 July 2009, from foreign service performed on or after 1 July 2009 may be exempt from tax in Australia, but the exemption for foreign employment income is limited to certain types of employment.

Section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936) sets out what foreign employment income is eligible for exemption from income tax in Australia. Changes were made to section 23AG with effect from 1 July 2009 which limits the exemption. You should take particular care in applying section 23AG where your period of overseas employment includes 1 July 2009.

This document gives answers to some common questions about how the changes could affect your foreign employment income and income tax or super in Australia.

For more information about: your foreign income, refer to Foreign income of Australian residents - what you need to know tax exemption for foreign income, refer to Exempt foreign employment income If you are an employer with an Australian resident employee who has worked overseas continuously for 91 days or more, refer to Foreign employment income and section 23AG - employers.