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Edited version of private ruling
Authorisation Number: 1011727625591
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Ruling
Subject: Foreign income - salary
Are you entitled to claim exemption for the foreign earnings derived from your foreign service pursuant to subsection 23AG(1AA) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer:
No.
This ruling applies for the following period
1 July 2009 to 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
During the 2009-10 income year you worked as a country director on a USAID funding Governance programme.
You worked for an organisation which is a USAID governance programme contractor with USAID which has also held similar contracts with AUSAID.
Relevant legislative provisions
Subsection 23AG(1) of the Income Tax Assessment Act 1936
Subsection 23AG(1AA) of the Income Tax Assessment Act 1936
Section 50-5 of the Income Tax Assessment Act 1997
Regulation 50-50.02 of the Income Tax Assessment Regulations 1997
Reasons for decision
Subsection 23AG(1) of the ITAA 1936 provides that, where Australian resident individuals are engaged in foreign service for a continuous period of not less than 91 days, foreign earnings derived from this foreign service are exempt from Australian tax. However, new subsection 23AG(1AA) of the ITAA 1936, which took effect from 1 July 2009, provides that those foreign earnings will not be exempt under section 23AG unless the continuous period of foreign service is directly attributable to:
(a) the delivery of Australian official development assistance (ODA) by the person's employer. ODA is assistance delivered through the Australian Government's overseas aid program, as administered by the Department of Foreign Affairs and Trade and/or the Australian Agency for International Development (AusAID). Australian ODA aims to reduce poverty and achieve sustainable development in developing countries, in line with Australia's national interest.
(b) the activities of the person's employer in operating a public fund declared by the Treasurer to be a developing country relief fund; or a public fund established and maintained to provide monetary relief to people in a developing country that has experienced a disaster.
(c) the activities of the person's employer, being a prescribed institution that is exempt from Australian income tax , where the employer is a prescribed religious or charitable institution located or pursuing objectives outside Australia which is exempt from Australian income tax pursuant to item 1.1 or 1.2 of section 50-5 of the Income Tax Assessment Act 1997. The prescribed organisations are listed in regulation 50-50.02 of the Income Tax Assessment Regulations 1997 (ITAR 1997).
(d) the person's deployment outside Australia as a member of a disciplined force by the Commonwealth, a State or Territory (or an authority of the Commonwealth, a State or a Territory)
(e) an activity of a kind specified in the regulations.
Your activities are not specified in the regulations. You are not a member of a disciplined force. Your employer is not named in regulation 50-50.02 of the ITAR 1997 and is not operating a public fund. Your employer does not hold a current contract for the delivery of ODA.
Accordingly, you are not eligible for exemption for the foreign earnings derived from this foreign service pursuant to subsection 23AG(1AA) of the ITAA 1936.
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