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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This edited version has been archived due to the length of time since original publication.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 your private ruling

Authorisation Number: 1012442700585

Ruling

Subject: Foreign income tax exemption

Question and answer

Are the salary and allowances you earned while employed overseas exempt from income tax in Australia?

Yes.

This ruling applies for the following periods:

Year ending 30 June 2013

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

The scheme commences on:

On or after 1 June 2012

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are an Australian resident for income tax purposes.

You are engaged on qualifying service in an overseas country for a continuous period that is greater than 91 days.

You are employed by an Australian Government Department on an approved project.

Section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936) does not apply to your circumstances.

You are engaged as a contractor.

You have supplied an official project number as issued by DFAT.

There is taxation treaty between the Australian Government and the overseas country.

The overseas country normally taxes salary and wage income.

There is an agreement between Australia and the overseas country that exempts the income from taxation in the overseas country.

Relevant legislative provisions:

Income Tax Assessment Act 1936 Section 23AF

Reasons for decision

Subsection 23AF(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 qualifying foreign service,

    · the foreign service is for a continuous period of at least 91 days,

    · you derive eligible foreign earnings from that foreign service,

    · the foreign service is directly attributable to an approved project by the Trade Minister or a delegate of the Trade Minister, and is allocated an official project number,

    · the income is not excluded by 23AG of the ITAA 1936 or any other provision listed in subsection 23AF(17) of the ITAA 1936, 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.

Given a consideration of the whole arrangement, it is accepted that you meet the above criteria and the income referable to your foreign service is exempt from income tax in Australia.


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