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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This edited version has been archived due to the length of time since original publication.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: 1012590276958

Ruling

Subject: Application of 23AG

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 2014

The scheme commences on:

The scheme has commenced.

Relevant facts and circumstances

You are an Australian resident for income tax purposes.

You are employed by an Australian Government Department.

You are being deployed to work in an overseas country for a continuous period that is greater than 91 days.

The overseas country normally taxes salary and wage income, however there is a double tax agreement between Australia and the overseas country that you will be deployed in that exempts the imposition of income tax in the overseas country.

There is also an agreement between Australia and the overseas country that exempts the imposition if income tax in the overseas country.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 23AG

Income Tax Assessment Act 1936 Section 23AG(1)

Income Tax Assessment Act 1936 Section 23AG(1AA)

Income Tax Assessment Act 1936 Section 23AG(2)

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, 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.

A person is 'deployed' within the meaning of paragraph 23AG(1AA)(d) of the ITAA 1936 if they have been directed to perform duties overseas by the Commonwealth, a State or a Territory or an authority thereof in their capacity as a member of a disciplined force. This includes the member being sent overseas to undertake or participate in study or training activities in their capacity as a member of the relevant disciplined force.

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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