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    Australian Defence Force members – income and work-related deductions

    If you earn your income as an Australian Defence Force (ADF) member, this information will help you to work out what:

    • income and allowances to report
    • you can and can't claim as a work-related deduction
    • records you need to keep.

    Find out about ADF members':

    Income – salary and allowances

    Your income statement or a payment summary shows your salary, wages and allowances for the income year.

    Include all the income you receive during the income year in your tax return, regardless of when you earn it, including:

    Don't include reimbursements.

    Salary and wages

    You must include your salary and wages as income in your tax return. Include any bonuses.

    Deployed overseas on eligible duty

    If you were deployed overseas, your salary and allowances may be exempt from tax if you were on eligible duty in a specified area.

    Generally, the Chief of the Defence Force will issue you with a certificate verifying that you were on eligible duty if you're entitled to have your salary and allowances exempt from income tax.

    Foreign deployment as a member of a disciplined force

    Your foreign employment income may be eligible for exemption from Australian income tax if you satisfy all of the following conditions:

    • you are an Australian resident for tax purposes
    • you are engaged in continuous foreign service for 91 days or more
    • your foreign service is directly attributable to deployment outside of Australia as a member of a disciplined force by the Australian Government or authority.

    When we say 'disciplined force', we mean a defence force, including a peacekeeping force.

    Your foreign employment income includes salary, wages and allowances.

    However, your foreign employment income isn't exempt from Australian income tax if you don't have to pay tax in the country where you earn that income because the foreign country either:

    • has a tax treaty with Australia or a law giving effect to a treaty agreement
    • doesn't impose tax on employment income.

    Generally, your foreign employment income isn't exempt from Australian income tax. This occurs where you don't pay tax in the country that you earned that income in, because of a law or agreement dealing with diplomatic privileges and immunities.

    Find out about:

    Other income

    You have to pay income tax on any other income you receive. For example, rent, interest, dividends and capital gains and income sources you need to pay tax on. This includes where you earn this income while you are deployed.

    The exemption from paying tax only applies to the salary and allowances you were paid while on eligible duty.

    See also:

    Allowances

    Include all allowances shown on your income statement or payment summary as income in your tax return.

    The following allowances are received by ADF members to recognise expenses you incur while doing your job. Income tax applies to these allowances. Depending on your individual circumstances, you may be able to claim a deduction for:

    • flying allowance
    • language proficiency allowance
    • special action forces allowance
    • uniform maintenance allowance
    • vehicle allowance.

    The following allowances are commonly received by ADF members for work considered special or dangerous, in recognition of holding special skills or to compensate for working conditions.

    Income tax applies to the following allowances, however you can't claim a deduction for:

    • arduous conditions allowance
    • clearance diving allowance
    • common duties allowance
    • district allowance
    • diving allowance
    • field allowance
    • flight duties allowance
    • hard-lying allowance
    • isolated establishment allowance
    • parachutist allowance
    • post allowance
    • seagoing allowance
    • service allowance
    • special Royal Navy allowance
    • submarine escape training facility allowance
    • submarine service allowance
    • trainee's dependant allowance
    • trainee leader's allowance
    • unpredictable explosives allowance.

    If an allowance is included as a separate amount on your income statement or payment summary, you need to include it as income on your tax return.

    Allowances on your income statement or payment summary

    You may receive allowances:

    • for work that may be unpleasant, special or dangerous
    • in recognition of holding special skills, such as a first-aid certificate
    • to compensate for industry peculiarities.

    These payments don't cover you for expenses you might incur. Include these allowances as income in your tax return.

    If you receive an allowance from your employer, you aren't always entitled to a deduction – it depends on the situation. See Deductions.

    Allowances not shown on your income statement or payment summary

    Your employer may not include some allowances on your income statement or payment summary. This can apply to travel allowances and overtime meal allowances paid under an industrial law, award or agreement. You can see these allowances on your payslips.

    If the allowance isn't on your income statement or payment summary, and you:

    • spent the whole amount on deductible expenses, you
      • don't include it as income in your tax return
      • can't claim any deductions for these expenses
    • spent more than your allowance, you
      • include the allowance as income in your tax return
      • can claim a deduction for your expense, if you are eligible. See Deductions.

    See also:

    Reimbursements

    If your employer pays you the exact amount for expenses you incur (either before or after you incur them), the payment is a reimbursement. We don't consider a reimbursement to be an allowance.

    If your employer reimburses you for expenses you incur:

    • don't include the reimbursement as income in your tax return
    • you can't claim a deduction for the expenses.

    Find out about ADF members':

      Last modified: 10 Feb 2021QC 26110