ATO Interpretative Decision

ATO ID 2003/182

Income Tax

Foreign Earnings - value for rent free accommodation provided in New Zealand
FOI status: may be released

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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.

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Does the value for rent free accommodation in New Zealand provided by a New Zealand employer to an Australian resident taxpayer form part of foreign earnings pursuant to subsection 23AG(7) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Decision

No. The value for rent free accommodation in New Zealand provided by a New Zealand employer to an Australian resident taxpayer does not form part of foreign earnings pursuant to subsection 23AG(7) of the ITAA 1936.

Facts

The taxpayer is a resident of Australia for income tax purposes.

The taxpayer is employed in New Zealand by a New Zealand company for a period of eight months.

The taxpayer receives a cash salary and rent free accommodation from the employer.

For New Zealand tax purposes, a value for the rent free accommodation was included in the taxpayer's assessable income.

Reasons for Decision

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.

Subsection 23AG(7) of the ITAA 1936 defines 'foreign earnings' to mean income consisting of earnings, salary, wages, commission, bonuses or allowances and 'foreign service' as service in a foreign country as the holder of an office or in the capacity of an employee.

Foreign earnings as defined in subsection 23AG(7) of the ITAA 1936 does not include value of accommodation.

Accordingly, the value for rent free accommodation is not foreign earnings for the purposes of subsection 23AG(7) of the ITAA 1936.

Note: To finalise the question on the assessability of the value of accommodation, the taxpayer is required to consider the double tax agreement between Australia and New Zealand.

Date of decision:  13 March 2003

Year of income:  Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1936
   subsection 23AG(1)
   subsection 23AG(7)

Keywords
Foreign income
FBT accommodation
International Tax
New Zealand

Business Line:  Public Groups and International

Date of publication:  28 March 2003

ISSN: 1445-2782

history
  Date: Version:
You are here 13 March 2003 Original statement
  25 February 2011 Archived

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