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Edited version of private ruling
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Ruling
Subject: Assessable income
Question and answer
Is your salary exempt from Australian income tax while working on an Australian aid project overseas?
This ruling applies for the following period
Year ended 30 June 2014
The scheme commenced on
1 July 2011
Relevant facts and circumstances
You work for the Commonwealth of Australia.
You have been selected to work overseas for 2 years.
You will be working abroad for the 2 years.
Your position will be funded under a Government Partnership Fund.
Relevant legislative provisions
Income Tax Assessment Act 1936
Section 23AG
Income Tax Assessment Act 1997
Section 6-5
Reasons for decision
Salary derived from foreign service
You are an Australian Public Service (APS) employee deployed on a Reconstruction and Development program.
As an APS employee deployed overseas on the abovementioned program your salary is exempt from tax under section 23AG(1AA) of the ITAA 1936 where:
· you have been engaged in the delivery of Australian official development assistance for a continuous period of not less than 91 days; and
· your salary is derived from that foreign service, including payments for recreation leave that has wholly accrued from the period of service abroad.
Accrued leave
The salary that is paid when taking recreational leave that accrued during the period of foreign service is also considered to be foreign earnings from that service, even though the recreational leave may be taken after the completion of the foreign service.