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Edited version of private advice
Authorisation Number: 1052334662547
Date of advice: 26 November 2024
Ruling
Subject: Exempt foreign employment income - approved overseas project
Question 1
Will the employment income you derive from an approved overseas project be exempt from tax under section 23AF of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer 1
Yes.
Section 23AF of the ITAA 1936 provides that where an Australian resident has been engaged on qualifying service on a particular approved project for a continuous period of not less than 91 days, any eligible foreign remuneration derived by the person that is attributable to the qualifying service is exempt from tax.
A project will be an eligible project where the Trade Minister (or delegate) is satisfied that the undertaking of the project is, or will be, in the national interest and approves the project for the purposes of section 23AF of the ITAA 1936.
Qualifying service includes time spent outside Australia working on the project, reasonable travel time between Australia and the project, absences due to accident or illness while engaged on qualifying service, and time spent on leave which accrued during the qualifying service (subsection 23AF(3) of the ITAA 1936).
Where an employee is engaged on an approved overseas project based on work cycles comprising of a number of weeks in the foreign country and a number of weeks travel time and leave spent in Australia, they will be taken to have been engaged on the approved project for a period of qualifying service equal to the total number of days they are engaged under the cyclical arrangement (Taxation Ruling IT 2015).
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are an Australian resident for tax purposes.
You have been offered employment to complete work on a project located in a foreign country.
The project duration is expected to be between X and X months.
You will be on a roster working for X days on-site in the foreign country followed by X days spent in Australia.
You have provided a letter from the Australian Trade and Investment Commission confirming the project is an eligible project for the purposes of section 23AF of the ITAA 1936.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 23AF