Foreign employment income and section 23AG - employees

What if I get my pay on or after 1 July 2009?

If you were eligible for the foreign employment income exemption up to 1 July 2009 and you receive a payment on or after that date for foreign service performed before that date, the payment will qualify for exemption.

The exemption does not apply to foreign earnings derived on or after 1 July 2009 from foreign service performed on or after 1 July 2009 where your foreign service is not directly related to one of the above types of employment that qualify for exemption.

Example

Natalie is an Australian resident who works as an engineer in Germany. She began work in Germany on 1 February 2009 and was eligible to claim exemption for her foreign employment income at that time. From 1 July 2009, following the changes to the law, Natalie's foreign employment income no longer qualifies for exemption.

Natalie received her salary for June on 5 July 2009. Although it was paid after 1 July 2009 Natalie's June salary is exempt from income tax in Australia because it was for foreign service before 1 July 2009.

Any salary Natalie receives on or after 1 July 2009 from her foreign service performed on or after 1 July 2009 will not be exempt because her foreign employment income no longer qualifies for the exemption.

Sections within Foreign employment income - general questions

• Does working overseas affect my tax?
• When will my foreign employment income be exempt?
• What types of employment qualify for exemption?
• What if I get my pay on or after 1 July 2009?
• How do I work out my 'continuous period of foreign service' if my foreign income stops being exempt?
• What if Australia has a tax treaty with the other country?
• What if I am working on an approved project?
• Does my exempt income affect my Medicare levy and surcharge?
• Is my exempt income included in the income tests?
• Does my exempt income affect my HELP repayments?
• Are my ESS benefits exempt?