Summary

The Australian Taxation Office (ATO) is writing to approximately 3,500 taxpayers requesting them to review their residency status and foreign employment income derived in light of the amendments to section 23AG of the Income Tax Assessment Act 1936 (ITAA 36) effective from 1 July 2009.

Background

Effective from 1 July 2009, foreign employment income derived by an employee in respect of overseas services rendered for a period exceeding 90 days would only be exempt from income tax in Australia where the individual is:

  • An overseas aid or charitable worker;
  • A government aid worker; or
  • A member of a disciplined force, e.g. Australian Defence Force and Australian Federal Police personnel deployed overseas.

Comments

This may potentially impact your organisation if you have employees working on short-term assignments overseas.

We will provide an update in this regard once further details become available. Should you have any concerns regarding your residency status, or assessability of your foreign employment income please contact us.

It is also worth noting that the ATO is becoming increasingly aggressive with respect to expatriates working in low tax or nil tax jurisdictions and seeking to break Australian tax residency for the duration of their assignment.

This is especially apparent where expatriates remit employment income derived to Australian bank account with the ATO working in conjunction with AUSTRAC to identify individuals in these circumstances.

Evidently the abovementioned measure is the next step in ATO attempting to include more overseas employment income into the Australian tax net.

This publication is issued by Moore Stephens Australia Pty Limited ACN 062 181 846 (Moore Stephens Australia) exclusively for the general information of clients and staff of Moore Stephens Australia and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name Moore Stephens within Australia (Australian Member). The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. Moore Stephens Australia, any Australian Member, any related entity of those persons, or any of their officers employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in this publication. Copyright © 2011 Moore Stephens Australia Pty Limited. All rights reserved.