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.
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