| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011663348099
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Foreign employment income - Country X
Is the foreign employment income you earn in the Country X exempt from income tax in Australia under paragraph 23AG(1AA)(b) of the Income Tax Assessment Act 1936 (ITAA 1936)?
No.
This ruling applies for the following period
Year ending 30 June 2010
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
The scheme commenced on
1 July 2009
Relevant facts and circumstances
You are an Australian resident for income tax purposes.
You are employed by a consulting company based in Country X.
You work as an economic advisor/specialist.
You work on contracts for Country X' s international development agency and an international organisation to assist in country development, poverty alleviation and export development.
Relevant legislative provisions
Subsection 23AG(1) of the Income Tax Assessment Act 1936
Subsection 23AG(7) of the Income Tax Assessment Act 1936
Section 23AG of the Income Tax Assessment Act 1936
Subsection 23AG(1AA) of the Income Tax Assessment Act 1936
Paragraph 23AG(1AA)(b) of the Income Tax Assessment Act 1936
Subsection 30-80(1) of the Income Tax Assessment Act 1997
Paragraph 30-85(2)(a) of the Income Tax Assessment Act 1997
Paragraph 30-85(2)(b) of the Income Tax Assessment Act 1997
Section 30-86 of the Income Tax Assessment Act 1997
Reasons for decision
Subsection 23AG(1) of the ITAA 1936 provides that foreign earnings of an Australian resident derived during a continuous period of foreign service of not less than 91 days employment in a foreign country are exempt from tax in Australia.
Foreign earnings include salary, wages, bonuses or allowances (subsection 23AG(7) of the ITAA 1936).
Foreign service means service in a foreign country as the holder of an office or in the capacity of an employee.
The foreign earnings must be derived from the foreign service, though not necessarily derived during the period of foreign service.
Section 23AG of the ITAA 1936 has been amended so that foreign employment income derived by Australian residents will only be exempt in certain circumstances.
These amendments are contained in subsection 23AG(1AA) of the ITAA 1936 and are effective from 1 July 2009.
Paragraph 23AG(1AA)(b) - Employer operating a developing country relief fund or a public disaster relief fund
The Explanatory Memorandum which accompanied the Tax Laws Amendment (2009 Budget Measures No 1) Act 2009 (which implemented subsection 23AG(1AA) of the ITAA 1936) states that this applies where the continuous foreign service period of a resident individual is directly attributable to the activities of the individual's employer in operating a public fund covered by item 9.1.1 or item 9.1.2 in the table in subsection 30-80(1) of the Income Tax Assessment Act 1997 (ITAA 1997) (international affairs deductible gift recipients).
Gifts or donations made to these public funds are tax deductible for income tax purposes to the donor.
Item 9.1.1 of subsection 30-80(1) of the ITAA 1997 applies to a public fund declared by the Treasurer to be a developing country relief fund.
A developing country relief fund is a fund established by an organisation solely for the purpose of providing relief to people of a developing country. The organisation must be an approved organisation as declared by the Minister for Foreign Affairs and the country must be a developing country as declared by the Minister for Foreign Affairs.
These conditions are contained in paragraphs 30-85(2)(a) and (b) of the ITAA 1997 respectively.
Item 9.1.2 of subsection 30-80(1) applies to a public fund operated by a public benevolent institution solely to provide relief to people of a developed country who are in distress as a result of a disaster (a public disaster relief fund). A public disaster relief fund is a fund established and operated by a public benevolent institution in response to an event recognised as a disaster by the Minister for Foreign Affairs.
The recognition requirement is contained in section 30-86 of the ITAA 1997.
A list of deductible gift recipients is available on the Australian Business Register. Neither the consulting company, nor the Country X agency for international development nor the international organisation is on the register.
In your case, you do not satisfy paragraph (b) of subsection 23AG(1AA) of the ITAA 1936 as your deployment is not directly attributable to your employer operating a developing country relief fund or a public disaster relief fund as an international affairs deductible gift recipient.
Consequently, your foreign employment income is not exempt from income tax in Australia under subsection 23AG(1) of the ITAA 1936.