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Edited version of your private ruling
Authorisation Number: 1012566836346
Ruling
Subject: Assessability of income while on overseas deployment
Question and answer:
Will the salary and allowances you receive from your overseas deployment with the ADF be exempt from income tax in Australia under section 23AG of the Income Assessment Act 1936 (ITAA 1936)?
Yes
This ruling applies for the following periods:
1 July 2012 to 30 June 2014
The scheme commenced on:
23 September 2012
Relevant facts and circumstances
You are an Australian resident for income tax purposes.
You are a member of a disciplined force who is engaged in foreign service.
You have been posted overseas for a period exceeding 91 days.
You will not return to Australia during this posting.
You are not a member of the Australian Embassy and do not have diplomatic status.
While on this posting you will receive your normal salary plus allowances.
There is a taxation treaty between Australia and the country you are posted to.
There is an agreement between Australia and the country you are posted to that exempts the income from taxation in that country.
Relevant legislative provisions:
Income Tax Assessment Act 1936 Section 23AG
Income Tax Assessment Act 1936 Section 23AG(1)
Income Tax Assessment Act 1936 Section 23AG(1AA)
Income Tax Assessment Act 1936 Section 23AG(2)
Reasons for decision
Subsection 23AG(1) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that foreign earnings are exempt from income tax where all of the following requirements are satisfied:
· you are a resident of Australia and a natural person,
· you are engaged in foreign service,
· the foreign service is for a continuous period of at least 91 days,
· you derive foreign earnings from that foreign service,
· the foreign service is directly attributable to an activity that is listed in subsection 23AG(1AA) of the ITAA 1936 (one of which is that you are deployed outside Australia as a member of a disciplined force); and
· the foreign earnings are not exempt from income tax in the foreign country only because of one of the reasons listed in subsection 23AG(2) of the ITAA 1936.
A person is 'deployed' within the meaning of paragraph 23AG(1AA)(d) of the ITAA 1936 if they have been directed to perform duties overseas by the Commonwealth, a State or a Territory or an authority thereof in their capacity as a member of a disciplined force. This includes the member being sent overseas to undertake or participate in study or training activities in their capacity as a member of the relevant disciplined force. As a member of the ADF, you are a member of a disciplined force for the purposes of section 23AG of the ITAA 1936.
Considering the above and the facts of your case, it is accepted that you meet the criteria for the exemption under subsection 23AG(1) of the ITAA 1936 to apply to you. Accordingly, the income and allowances you earn that are referrable to your foreign service are exempt from income tax in Australia.
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