Taxation Determination
TD 2012/8A1 - Addendum
Income tax: what types of temporary absences from foreign service form part of a continuous period of foreign service under section 23AG of the Income Tax Assessment Act 1936?
-
Please note that the PDF version is the authorised version of this ruling.View the consolidated version for this notice.
Addendum
This Addendum is a public ruling for the purposes of the Taxation Administration Act 1953. It amends Taxation Determination TD 2012/8 to clarify that short unexpected work-related absences from the foreign country for reasons related to that foreign service where the person returns to Australia are not to be treated as part of the person's continuous foreign service by the Commissioner.
TD 2012/8 is amended as follows:
Omit 'appendixes'; substitute 'appendix'.
After the preamble, insert Table of Contents:
| Table of Contents | Paragraph |
| Ruling | 1 |
| Examples | 9 |
| Example 1 – recreation leave attributable to foreign service | 9 |
| Example 2 – shorter working day | 13 |
| Example 3 – recreation leave | 15 |
| Example 4 – cyclical arrangement | 17 |
| Example 5 – sick leave, period of foreign service and foreign earnings | 20 |
| Example 6 – absence because of accident or illness (standing down) | 23 |
| Example 7 – absence because of accident or illness (return to work program) | 26 |
| Example 8 – absence because of accident or injury (workers' compensation) | 28 |
| Example 9 – carer's leave | 30 |
| Example 10 – weekend and public holidays | 32 |
| Example 13 – one-sixth legislative rule | 38 |
| Date of effect | 41 |
| Appendix 1 – Explanation | 42 |
| Explanation | 42 |
| Extended meaning of 'engaged in foreign service' – subsection 23AG(6) | 49 |
| Recreation leave | 51 |
| Cyclical arrangements | 56 |
| Sick leave or leave because of an accident or illness of a person other than the taxpayer, including death of another person | 57 |
| Maternity leave and parental leave | 60 |
| Weekends, public holidays and other non-leave days | 68 |
| Available days | 73 |
| The one-sixth legislative rule in subsection 23AG(6A) | 74 |
| Foreign service and exempt income | 78 |
(a) Omit footnote 1.
(b) After 'see Examples 5 and 6', insert 'of this Determination'.
(c) Omit the dot points; substitute:
- •
- in accordance with the terms and conditions of that foreign service (that is, the absence is permitted by the employer, whether in an employment contract or under a separate arrangement); and
- •
- for any of the following reasons
- –
- recreation leave on full pay that is attributable to the period of foreign service;2
- –
- because of an accident or illness of the taxpayer; or
- –
- because of an accident or illness of a person other than the taxpayer, including the death of another person.
(d) After the paragraph, insert new paragraphs 1A and 1B:
1A. To fall within the definition of 'foreign service', the service must be performed in a foreign country outside Australia. Service on international waters or in international airspace will not count as foreign service.
1B. All further legislative references in this Determination are to the ITAA 1936, unless otherwise indicated.
(a) After 'paragraph 1', insert 'of this Determination'.
(b) After 'Examples 1 and 5', insert 'of this Determination'.
Omit 'see Explanation at paragraphs 55 and 57 to 59'; substitute 'see paragraphs 55 and 57 to 59 of this Determination'.
(a) Omit '1/6'; substitute 'one-sixth'.
(b) Omit 'see Explanation at paragraphs 74 to 77'; substitute 'see paragraphs 74 to 77 of this Determination'.
(a) Omit the first sentence (excluding footnotes); substitute:
A person is not treated as absent from foreign service on days such as weekends, public holidays, rostered days off, days off due to part-time arrangements, flex-days, 'compulsory lay off or lay over days'3, 'grounded days'4 and days off in lieu where those days are part of the normal working conditions for the foreign service (see paragraphs 68 to 70 of this Determination).
(b) In footnote 3, omit 'Compulsory lay off/over days'; substitute 'Compulsory lay off or lay over days'.
After 'Example 2', insert 'of this Determination'.
Omit 'and Explanation at paragraphs 78 to 81'; substitute 'and paragraphs 78 to 81 of this Determination'.
Insert new heading 'Examples' .
Omit the wording of the paragraph; substitute:
However, under the one-sixth legislative rule in subsection 23AG(6A) (see paragraphs 74 to 77 of this Determination) the periods of foreign service before and after this one-day break can be added together and treated as a continuous period of foreign service.
Omit 'see Explanation at paragraphs 78 to 81'; substitute 'see paragraphs 78 to 81 of this Determination'.
Omit the paragraphs, including headings.
In the heading, omit '1/6'; substitute 'one-sixth' .
Omit 'subsection 23AG(6B)– see Explanation at paragraph 75'; substitute 'subsection 23AG(6B) – see paragraph 75 of this Determination'.
Omit the wording of the paragraph; substitute:
This Determination applies both before and after its date of issue.
Omit the wording of the paragraph; substitute:
This was made clear by Graham J in Overseas Aircrew Basing Limited v Commissioner of Taxation [2009] FCA 7 (Overseas Aircrew Basing). At [92] of the decision, Graham J pointed out that service in a foreign country is not synonymous with service outside Australia, and went on to say:… Section 23AG is directed at, relevantly, exempting from tax in Australia, salaries derived in a foreign country in which those salaries are taxed. It is not directed at exempting from tax in Australia salaries derived in Australia, in Australian airspace, in international airspace, in the airspace of other countries of the world or in other countries to which and from which their employer directs them to fly aircraft.
(a) Omit 'paragraphs 93 and 94'; substitute '[93] and [94]'.
(b) In the quote, omit 'who are 'actually on the job' in the'; substitute 'who are "actually on the job" in the'.
(c) After the paragraph, insert new paragraph 46A:
46A. The meaning of foreign country in the context of section 23AG was also considered in Chaudhri v Commissioner of Taxation [2001] FCA 5545A where Hill, Drummond and Goldberg JJ explained that the term did not include the ocean or any part of it, saying:11 It may be noted at the outset that the expression "foreign country" is defined, subject to any contrary intention, in s 22(1)(f) of the Acts Interpretation Act 1901 (Cth) to mean:"any country (whether or not an independent sovereign state) outside Australia and the external Territories"12 We can see nothing in the context which would displace this definition. Indeed, it was not suggested otherwise. But, that still leaves for decision the meaning of the word "country", for it was the meaning of this word which was the focus of the submissions for Mr Chaudhri.…29 Ultimately, we think that we should return to the ordinary English use of the word "country" in the context of that being a place where personal service such as employment may be engaged in and where income may be derived. In that context, ordinary usage would not suggest that the high seas, or for that matter some parts of them, were in a composite sense to be regarded as a country, or for that matter a series of countries. Rather the ordinary meaning of the expression "foreign country" in modern usage looks to a political entity, be that a tract of land, a district, or a group of islands. It does not extend to an ocean or region of the sea.
(d) In new paragraph 46A, after 'Chaudhri v Commissioner of Taxation [2001] FCA 554', insert new footnote 5A:
5A At [11–12] and [29].
After 'paragraphs 49 to 73', insert 'of this Determination'.
(a) Omit '1/6'; substitute 'one-sixth'.
(b) After 'paragraphs 74 to 77', insert 'of this Determination'.
After 'relevantly defined as', insert new footnote 5B:
5B Macmillan Publishers Australia (2026) The Macquarie Dictionary online, www.macquariedictionary.com.au, accessed 29 May 2026.
(a) Omit the second sentence; substitute:
The definition of 'maternity leave' given in The Macquarie Dictionary5C is 'leave of absence taken by a female employee, usually with pay, shortly before and after the birth or adoption of her child'.
(b) After 'The Macquarie Dictionary', insert new footnote 5C:
5C Macmillan Publishers Australia (2026) The Macquarie Dictionary online, www.macquariedictionary.com.au, accessed 29 May 2026.
After 'defines 'illness' as', insert new footnote 5D:
5D Macmillan Publishers Australia (2026) The Macquarie Dictionary online, www.macquariedictionary.com.au, accessed 29 May 2026.
After 'defines 'accident' as', insert new footnote 5E:
5E Macmillan Publishers Australia (2026) The Macquarie Dictionary online, www.macquariedictionary.com.au, accessed 29 May 2026.
(a) In heading, omit 'etcetera'; substitute 'and other non-leave days' .
(b) Omit 'paragraph 96'; substitute '[96]'.
Omit the wording of the paragraph; substitute:
A person is treated as being engaged in foreign service on days such as weekends, public holidays, rostered days off, days off due to part-time arrangements, flex-days, 'compulsory lay off or lay over days', 'grounded days' and days off in lieu where those days are part of the normal working conditions for the foreign service. On such days, a person is either not required to work (in the case of weekends, public holidays and days off due to part-time arrangements) or is absent due to having already worked their required hours.
Omit the paragraphs, including heading.
Omit the final sentence.
(a) In the heading, omit '1/6'; substitute 'one-sixth'.
(b) Omit '1/6'; substitute 'one-sixth'.
Omit all instances of '1/6'; substitute 'one-sixth'.
After 'Example 5', insert 'of this Determination'.
This Addendum applies to the 2026–27 income year and later income years.
Commissioner of Taxation
7 October 2026
© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA
You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
References
ATO references:
NO 1-19IRPONZ