Are you a member of the Australian Defence Force who served overseas during the past tax year? If your deployment meets certain criteria you may qualify for one of the overseas forces tax exemptions on your income.
In this post we’ll discuss the two overseas forces tax exemptions available to overseas forces and how to work out which, if any, you may have already received.
Overseas forces tax exemption 1: The Section 23AD Exemption
The section 23AD exemption applies to Australian Defence Forces members on warlike service during or after 2002.
To qualify for this tax exemption, you must receive a certificate from the Chief of the Defence Force. It verifies that you were or are currently deployed on eligible duty with a specified organisation in a specified area.
This income is not taken into account by the ATO when calculating tax on other assessable income. It is also not listed on your PAYG summary. There will, however, be a note at the bottom of your PAYG, which states a special concession or exemption applies. It will list Section 23 AD as the exemption and the number of days it applies for.
Overseas forces tax exemption 2: The Section 23AG Exemption
The section 23AG exemption applies to Australian Defence Forces members who serve overseas for a continuous period of 91 days or more, who earn foreign employment income.
This income is taken into account by the ATO, when calculating tax on all your assessable income during the year. You must include it on your individual tax return at item 20N.
If you qualify for this exemption, income earned will be listed on your Income Statement under “Exempt Foreign Employment Income”. There will also be a note at the bottom of your Income Statement, which states a special concession or exemption applies. It will list Section 23AG as the exemption and the number of days it applies for.
Serve overseas, but do not receive an Exemption?
If you serve overseas and your pay and allowances are not tax exempt, under section 23AD and 23AG, you may be eligible for a tax offset.
More information:
For further information on this offset, please take a look at our comprehensive overseas forces tax offsets blog which discusses this tax offset and how you may qualify to receive it.
