Edited version of private ruling

Authorisation Number: 1011879283441

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Ruling

Subject: Taxation of income

Question 1

Is the income you receive which is attributable to your role as an adviser to an overseas government organisation taxed at normal resident tax rates?

Answer

Yes.

Question 2

Are you entitled to any tax offsets in relation to the income attributable to your role as adviser to an overseas government organisation?

Answer

No.

Question 3

Are you entitled to a tax offset as you are required to work in a remote area when performing your duties as an adviser to an overseas government organisation?

Answer

No.

This ruling applies for the following periods

Year ended 30 June 2010
Year ended 30 June 2011
Year ending 30 June 2012

The scheme commenced on

1 July 2009

Relevant facts and circumstances

You are an adviser to an overseas government organisation.

You provide aid and advice to the organisation.

This role is performed as part of a fly in/fly out arrangement. You travel to Country A and travel within the region to deliver assistance and advice.

Each deployment is for less than 91 days.

As part of the deployments you travel to various locations of hardship which do not provide any services which equate to Australian standards of living.

When in Australia you carry out duties that apply to your adviser role.

You are required to take your recreation leave during periods you are in Australia.

You are not a member of the Australian Defence Force.

Your role is not considered to be part of an international deployment group mission.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 23AB
Income Tax Assessment Act 1936 Section 23AG
Income Tax Assessment Act 1936 Section 79A
Income Tax Assessment Act 1936 Section 79B
Income Tax Assessment Act 1936 Section 159ZRA

Income Tax Assessment Act 1936 Section 159ZRB
Income Tax Assessment Act 1936 Section 160AAA
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 82-10
Income Tax Assessment Act 1997 Section 82-70

Income Tax Assessment Act 1997 Section 83-15
Income Tax Assessment Act 1997 Section 83-85
Income Tax Assessment Act 1997 Division 301
Income Tax Assessment Act 1997 Division 302
Income Tax Rates Act 1986 Schedule 7

Reasons for decision

Summary

The income you receive for your duties as an adviser to an overseas government organisation will be included in your taxable income and taxed at general rates in Australia. You are not entitled to have this income concessionally taxed nor are you entitled to any tax offsets in relation to the income received or when you performed your duties.

Detailed reasoning

Section 6-5 of the Income Tax Assessment Act 1997 states that the assessable income of an Australian resident includes income derived from all sources whether in or out of Australia, during the income year.

A taxpayer's taxable income is determined by adding up their assessable income and deducting any expenses or outgoings incurred in earning that income.

Certain types of income are exempt from tax in Australia under various provisions of the income tax legislation. One type is foreign employment income where the following conditions are met:

· you are a resident of Australia

· you are engaged in continuous foreign service as an employee for 91 days or more

· your foreign service is directly attributable to any of the following

o delivery of Australian official development assistance by your employer

o activities of your employer in operating a public fund declared by the Treasurer to be a developing country relief fund

o activities of your employer in operating a public fund established and maintained to provide monetary relief to people in a developing foreign country who are distressed as a result of a disaster (a public disaster relief fund)

o activities of your employer as a prescribed charitable or religious institution exempt from Australian income tax because it is located outside Australia or the institution is pursuing objectives outside Australia

o deployment outside Australia by an Australian government (or an authority thereof) as a member of a disciplined force

and

· you are not excluded from the exemption by the non-exemption conditions.

You travel to Country A for periods of less than 91 days at a time to perform your duties as an adviser. Between these trips you carry out your adviser related duties in Australia. As the periods you spend in Country A are less than 91 continuous days, your income attributable to your adviser activities is not exempt from tax in Australia.

Your adviser related income is included in calculating your taxable income for tax purposes.

An individual resident's taxable income is taxed at general rates contained within Schedule 7 to the Income Tax Rates Act 1986. Concessional treatment is applied where the taxpayer is either a special professional or a primary. Special professional taxpayers include authors, inventors, performing artists, production associates and sportspeople. The purpose of the of the concessional treatment for these taxpayers is to average the eligible income over a number of years and reduce the fluctuations in the amount of tax payable from year to year.

Based on your employer and occupation you are not considered to be a special professional or primary producer. Therefore that portion of your income that is attributable to your adviser duties cannot be averaged and concessionally taxed on this basis.

The payments of certain types of income attract tax offsets. The tax offsets have the effect of limiting the amount of tax payable on that particular type of income. Income to which a tax offset may be applied include:

· employer termination payments, unused annual leave and long service leave

· certain superannuation pensions and rollover annuities

· certain pensions and social security benefits paid by the government

· lump sum payments in arrears, and

· assessable life assurance bonuses.

The income which you receive for your adviser duties does not fall within the definition of any of the above income types. Therefore there are no tax offsets which would reduce or limit the tax payable on your adviser related income.

Taxpayers who live or work in remote areas are entitled to a tax offset where:

· they reside in a defined zone area of Australia and its territories for more than 183 days in the financial year

· they are a member of the Defence Force and serve in a qualifying overseas locality for more than 183 days in a financial year, or

· they are civilian personnel contributed by Australia to an armed force of the United Nations overseas.

Country A and your employment duties there are not considered to fall within any of the areas described above. Country A is not a remote area of Australia or its territories, you are not a member of the Defence Force nor is your work in Country A related to working for an armed force of the United Nations. Therefore you are not entitled to any tax offsets related to working in a remote area.

Based on the above discussions, the income you receive for your duties as an adviser to an overseas government organisation will be included in your taxable income and taxed at general rates in Australia. You are not entitled to have this income concessionally taxed nor are you entitled to any tax offsets in relation to the income received or when you performed your duties.