ATO Interpretative Decision
ATO ID 2003/473 (Withdrawn)
Income Tax
Assessability of income received by an Australian resident employed on a project in IraqFOI status: may be released
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This ATO ID is withdrawn and is replaced by ATO ID 2004/616.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the salary and wages received by a resident taxpayer, for employment carried out in Iraq, assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. The salary and wages received by the resident taxpayer, for employment carried out in Iraq, are not assessable under subsection 6-5(2) of the ITAA 1997 as they are exempt from tax in Australia under section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936).
Facts
The taxpayer is a resident of Australia for income tax purposes.
The taxpayer is employed as an adviser to help the reconstruction of an Iraqi industry.
The taxpayer is in Iraq for six months.
Iraq taxes employment income.
Reasons for Decision
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income.
Section 11-15 of the ITAA 1997 lists those provisions dealing with income which may be exempt. Included in this list is section 23AG of the ITAA 1936 which deals with overseas employment income.
Subsection 23AG(1) of the ITAA 1936 provides that where a resident taxpayer is engaged in foreign service for a continuous period of not less than 91 days, any foreign earnings derived will be exempt from tax in Australia. 'Foreign service' includes service in a foreign country in the capacity as an employee and 'foreign earnings' includes income consisting of salary and wages (subsections 23AG(6) and 23AG(7) of the ITAA 1936).
However, subsection 23AG(2) of the ITAA 1936 states that foreign earnings will not be exempt from tax under subsection 23AG(1) of the ITAA 1936 if the amount is exempt from income tax in the foreign country only because of any of the reasons listed.
Since the taxpayer is employed in Iraq for a continuous period of not less than 91 days and the salary and wages are not exempt from tax in Iraq because of one of the reasons listed in subsection 23AG(2) of the ITAA 1936, the income received from Iraq will be exempt from tax under subsection 23AG(1) of the ITAA 1936.
Accordingly, the salary and wages received by the resident taxpayer while employed in Iraq will not be assessable under subsection 6-5(2) of the ITAA 1997.
Date of decision: 13 June 2003Year of income: Year ended 30 June 2003 Year ended 30 June 2004
Legislative References:
Income Tax Assessment Act 1936
section 23AG
subsection 23AG(1)
subsection 23AG(2)
subsection 23AG(6)
subsection 23AG(7)
subsection 6-5(2)
subsection 6-15(2)
section 11-15
Keywords
Exempt income
Foreign income
International tax
Iraq
ISSN: 1445-2782
| Date: | Version: | |
| 13 June 2003 | Original statement | |
| You are here | 16 July 2004 | Archived |