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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This edited version has been archived due to the length of time since original publication.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: 1012554527454

Ruling

Subject: Assessability of foreign income

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 ended 30 June 2013

Year ending 30 June 2014

The scheme commenced on:

1 July 2012

Relevant facts and circumstances

You are an Australian resident for income tax purposes.

You will be paid from the Overseas Development Aid budget.

Your are employed by an Australian Government Department.

You will be engaged in foreign employment for more than 91 continuous days.

There is a memorandum of understanding between Australia and the overseas country that exempts the income from taxation in the overseas country.

The overseas county normally taxes salary and wage income

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

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 23AG

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

    · 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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