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Tax Residency

Section 23AG – Exempt foreign service income

Under section 23AG of the Income Tax Assessment Act 1936 (ITAA),  Foreign employment income is exempt from tax if all of the following applies:

  • you are an Australian resident
  • you are engaged in continuous foreign service as an employee for 91 days or more
  • your foreign service is directly attributable to any of the following

delivery of Australian Official Development Assistance by your employer (except if your employer is an Australian Government agency)

activities of your employer in operating a public fund declared by the Treasurer to be a developing country relief fund

activities of your employer in operating a public fund established and maintained to provide monetary relief to people in a developing foreign country who are distressed as a result of a disaster (a public disaster relief fund)

activities of your employer as a prescribed charitable or religious institution exempt from Australian income tax because it is located outside Australia or the institution is pursuing objectives outside Australia

deployment outside Australia by an Australian government (or an authority thereof) as a member of a disciplined force

delivery of Australian Official Development Assistance by your employer (except if your employer is an Australian Government agency)

activities of your employer in operating a public fund declared by the Treasurer to be a developing country relief fund

activities of your employer in operating a public fund established and maintained to provide monetary relief to people in a developing foreign country who are distressed as a result of a disaster (a public disaster relief fund)

However, from 1 July 2016, Australian government employees who earn foreign income while delivering Australian official development assistance (ODA) will not be eligible for exemption from Australian income tax on their foreign employment income.

Members of a disciplined force, such as Australian Defence Force (ADF) and Australian Federal Police (AFP), delivering ODA will still be eligible for exemption from Australian income tax on their foreign employment income.

 

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Law Council of Australia
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