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ATO Interpretative Decision

ATO ID 2002/600 (Withdrawn)

Income Tax

Income - Defence Force personnel in the Australian Training Support Team in East Timor
FOI status: may be released
  • This ATO ID has been withdrawn due to legislative changes which came into effect from 1 July 2009. Despite its withdrawal, this ATOID continues to be a precedential view in respect of decisions for income years up to, and including, the 2008-2009 income year.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Are income and allowances received by the taxpayer exempt from income tax under section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer is a member of the Australian Defence Force posted to the Australian Training Support Team in East Timor?

Decision

Yes. The income and allowances received by the taxpayer are exempt from income tax under section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer is a member of the Australian Defence Force posted to the Australian Training Support Team in East Timor as the taxpayer has derived income and allowances from foreign service and their foreign service was more than ninety days.

Facts

The taxpayer is a member of the Australian Defence Force.

The taxpayer is posted to East Timor with the Australian Training Support Team for a period of six months (183 days).

The taxpayer's income is not exempt under section 23AD of the ITAA 1936 as they do not have a written certificate from the Chief of the Defence Force to the effect that they are on eligible duty with a specified organisation in a specified area outside Australia.

Reasons for Decision

Section 23AG of the ITAA 1936 provides a general exemption from income tax for the foreign earnings of an Australian resident taxpayer who works overseas for a continuous period of not less than 91 days.

Section 23AG of the ITAA 1936 does not apply where the income is exempt from income tax in the foreign country only because of any of the following reasons:

•
A double tax agreement or law of that foreign country that gives effect to a double tax agreement;
•
The foreign country exempts income from employment or does not tax employment income generally; or
•
A law of another country or an international agreement with which Australia is a party dealing with the privileges and immunities of diplomats or consuls, or of persons connected with international organisations.

Australia does not currently have a domestically implemented double tax agreement with East Timor.

There are currently no exemptions from income tax in East Timor for employment income derived in that country. Under East Timor's current tax laws, employment income earned in East Timor may be subject to taxation in East Timor. The fact that there is not yet a functioning collection authority is not relevant.

The privileges and immunities of persons connected with the United Nations do not apply to the situation in East Timor due to East Timor's unique political situation.

The taxpayer was engaged in foreign service for a period exceeding 91 days. The foreign earnings derived from that service is not exempt from taxation in East Timor. Accordingly, the income and allowances received by the taxpayer from their employment in East Timor will be exempt from Australian income tax under section 23AG of the ITAA 1936.

Note: the taxpayer will need to declare their income and allowances as exempt foreign employment income in their Australian tax return as it is taken into account when determining the amount of tax payable on the taxpayer's other income.

Date of decision:  13 March 2002

Legislative References:
Income Tax Assessment Act 1936
   section 23AD
   section 23AG

Related ATO Interpretative Decisions
ATO ID 2001/608

ATO Interpretative Decisions overturned by this decision
ATO ID 2001/178

Keywords
Defence force overseas service
Exempt income

Business Line:  Small Business/Individual Taxpayers

Date of publication:  31 May 2002

ISSN: 1445-2782

history
  Date: Version:
  13 March 2002 Original statement
You are here 28 May 2010 Archived

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