Are you a member of the Australian Defence Force who served overseas during the past tax year? If your deployment meets certain criteria then you may qualify for a tax emption on the income you earned while deployed.
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.
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 which states that you have been/are deployed on eligible duty with a specified organisation in a specified area.
This income is not taken into account by the ATO in calculating tax on other assessable income and is 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.
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 and earns foreign employment income.
Please note, this income is taken into account by the ATO in calculating tax on other assessable income you earn during the financial year and it must be included on your individual tax return at item 20N.
If you qualify for this exemption, income earned will be listed on your PAYG Summary under “Exempt Foreign Employment Income”. There will also be a note at the bottom of your PAYG 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 the above Tax Exemptions?
If you serve in an overseas locality and your pay and allowances are not tax exempt under section 23AD and 23AG, then you may instead be able to receive a tax offset on your tax return.
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.