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  • Working overseas as a member of the ADF or Australian Federal Police

    If you are a member of the Australian Defence Forces (ADF) who served overseas, your pay and allowances may be exempt from tax if you served on eligible duty in a specified area.

    You require a certificate issued by the Chief of the Defence Forces (or delegate) to the effect that you are on eligible duty with a specified organisation in a specified area outside Australia for this exemption to apply. You should check with your employer to work out if your service meets this requirement.

    Your exempt income is not taken into account in calculating tax payable on other taxable income and does not have to be included in your tax return.

    Foreign service does not start until you arrive in the foreign country. If this specific exemption does not apply, your income may be exempt from tax where you have served overseas for a continuous period of 91 days or more.

    Tax offset for members of ADF serving overseas

    If you served as a member of the ADF at an eligible overseas locality, you may be entitled to a zone or overseas forces tax offset.

    You are not entitled to the tax offset for any period that your pay and allowances were exempt income.

    Tax offset for people serving with an armed force under the United Nations

    If you served outside Australia with an armed force under the control of the United Nations, you may be entitled to a zone or overseas forces tax offset.

    You must be paid by or on behalf of the Australian Government to be eligible.

    Any period of service from which you earn exempt foreign employment income does not count towards this offset.

    The offset is calculated using the same rules as the overseas forces tax offset.

    Completing your tax return

    You don't include in your tax return exempt income from service in a specified area.

    You do include in your tax return income which is exempt only because of continuous foreign service of 91 days or more. This income is included only to calculate the rate of tax you will pay on your assessable income.

    If you have made a loss, your exempt income is added to your other income, but only to work out the amount of the loss, if any, you can carry forward to the next year's tax return.

    If your foreign income is assessable you have to include it in your tax return.

    If you are entitled to the overseas tax offset you need to claim it.

    For help applying this information to your own situation, contact us

      Last modified: 09 Jun 2022QC 18313