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Edited version of private advice
Authorisation Number: 7920164773628
Date of advice: 5 June 2024
Ruling
Subject: Exempt income - foreign service
Question 1
Does your overseas posting to Country B form one continuous period of foreign service for the purposes of Section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer 1
Yes.
The period of stand-down leave forms part of your continuous period of foreign service as it was a compulsory component of your posting, therefore; your periods of recreation leave do not exceed the 1/6th legislative limit and your period of foreign service in Country B is taken to form one continuous period of foreign service.
Question 2
Are you eligible for the overseas employment income tax exemption pursuant to section 23AG of the ITAA 1936?
Answer 2
Yes.
Subsection 23AG(1) of the ITAA 1936 provides that foreign earnings of an Australian resident derived during a continuous period of foreign service of not less than 91 days employment in a foreign country are exempt from income tax in Australia.
You have been deployed for longer than 91 days of foreign service as a member of a recognised disciplined force, to which the provisions of section 23AG of the ITAA 1936 apply.
Therefore, the income you derived from your employment in the Country B is exempt from tax in Australia under section 23AG of the ITAA 1936.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You are an Australian resident for tax purposes.
You are employed as a member of a recognised disciplined force.
From XX XX 20XX to XX XX 20XX, you were seconded to work at an overseas location.
The secondment was located in Country B.
The secondment was for a period of XXX days.
You maintained standard duty of hours and the foreign service conditions of employment were consistent with your normal conditions of service.
Between XX XX 20XX and XX XX 20XX, whilst on foreign service duty in Country B, you accrued X days of recreation leave.
You took the following periods of leave during your foreign service:
• XX XX 20XX to XX XX 20XX - recreation leave (X days) (Absence A)
• XX XX 20XX to XX XX 20XX - stand down leave (XX days) (Absence B)
• XX XX 20XX to XX XX 20XX - recreation leave (X days) (Absence C)
Absence A does not form part of your continuous period of service, this period of leave is not attributable to your foreign service.
Absence B is for stand down leave, which is not a leave type that is personally accrued. The stand down leave was automatically applied to you, in accordance with the normal working conditions of service and it is attributable to the period of time you were actively engaged in foreign service.
Absence C was scheduled in accordance with the terms and conditions of your foreign service. The absence was permitted by your employer, was paid in full and was wholly attributable to your foreign service.
Absence B and Absence C do not constitute a break in the foreign service.
You undertook a continuous period of foreign service, for a period of XXX days.
On XX XX 20XX, you returned to your Australian Unit.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1936 section 23AG