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This edited version has been archived due to the length of time since original publication.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

Authorisation Number: 1051451998832

Date of advice: 15 November 2018

Ruling

Subject: Foreign employment income - Australian defence force

Question

Is your foreign employment income exempt from taxation in Australia under Section 23AG of the Income Assessment Act 1936 (ITAA 1936)?

Answer

Yes

Subsection 23AG(1) of the 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.

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 and thus, not assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997).

This ruling applies for the following periods:

For the year ended 30 June 2017

For the year ended 30 June 2018

For the year ended 30 June 2019

The scheme commences on:

January 2017

Relevant facts and circumstances

You are a member of the Australian Defence Force (ADF) on deployment to Country X delivering a relevant Program.

You have been posted in Country X for two years.

You provided that your liability for taxation is dealt with in:

    ● the Agreement Between Australia and Country X Regarding the Status of Forces of Each State in the Territory of the other State (1977) No. 6 (Australian Treaty 1977 No. 6), and

    ● the Defence Cooperation Arrangement between the Government of Australia and the Government of Country X.

You provided a copy of a letter written by the Department of Defence Australia the Acting Secretary of Country X Department of Defence regarding the income tax treatment of Australian Department of Defence (ADOD) military and civilian personnel supporting the delivery of Australian relevant program activities in Country X.

The Acting Secretary of Country X Department of Defence responded to the Secretary of the Department of Defence Australia.

Written correspondence confirms that the staff position that you are in supports the delivery of the relevant program.

You spend 100% of your time in the position supporting the delivery of the relevant program.

Relevant legislative provisions

Income Tax Assessment Act 1936 section 23AG

Income Tax Assessment Act 1936 subsection 23AG(1)

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

Income Tax Assessment Act 1936 paragraph 23AG(1AA)(d)

Income Tax Assessment Act 1936 subsection 23AG(2)

Income Tax Assessment Act 1936 paragraph 23AG(2)(b)

Income Tax Assessment Act 1936 subsection 23AG(6)

Income Tax Assessment Act 1936 subsection 23AG(7)

Income Tax Assessment Act 1997 subsection 6-5(2)

Income Tax Assessment Act 1997 subsection 6-15(2)

Income Tax Assessment Act 1997 section 11-15

International Tax Agreements Act 1953 section 4

International Tax Agreements Act 1953 Schedule 29 Article 19 and

Taxation Administration Act 1953 Division 12


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