Changes to Family Tax Benefit (FTB) calculations

1. The Family Assistance Office recently distributed a booklet which advised that from 1 July 2008 tax-exempt foreign income paid from an Australian source while you are stationed/deployed overseas will now be included to work out your family assistance. As warlike service is treated differently, only personnel deployed on non-warlike operations will be affected by this change.

2. Subject to certain qualifying conditions, namely being inside the area of operations for at least 91 days, personnel deployed on most non-warlike operations, in common with all other Australian citizens, may be able to claim an exemption from paying tax in Australia (section 23AG of the Income Tax Assessment Act). Although referred to as an exemption, section 23AG effectively recognises the tax liability a person has in the country they are working in and that he/she should not be taxed twice.

3. It is this income, currently exempt under section 23AG, which will now be included in the assessment of family tax benefit. Any reduction in family tax benefit entitlement, in comparison to that received before deploying will depend on the allowances received. The primary allowance, Deployment Allowance, is exempt from taxation in its own right (a pure exemption) and will not be counted in calculations, while Field Allowance would be included.

Last updated: 24 July 2008