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Note: This Division is designed to give an overview of the taxation implications of service on a deployment. It does not try to deal with members' individual tax liability. Members should seek independent tax advice, taking account of relevant tax law and rulings. |
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Members may be eligible for exemption from Australian income tax under section 23AG of the Income Tax Assessment Act 1936. To claim the exemption, members must complete the necessary items in their income tax return. |
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In the absence of qualifying for a section 23AG exemption, the member may be eligible to claim the overseas Defence Force rebate. They will not be eligible for both the exemption and the rebate. |
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Before |
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Section 23AG of the Income Tax Assessment Act 1936 is a general provision that exempts certain foreign earnings where a member has engaged in foreign service for a continuous period of not less than 91 days. |
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Defence Attaches are not eligible for this exemption. |
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The overseas Defence Force rebate is worked out on a pro-rata basis for the time less than 183 days that the member spends in the specified area. Example: A member spends 160 days in the specified area. The maximum rebate is multiplied by 160/183 to work out the reduced amount. |
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The maximum rebate is AUD 338 a year and 50% of any other related rebate such as a dependant spouse. |
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Defence Attaches are not eligible for this rebate. |
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The member's Annual Payment Summary (formerly Group Certificate) will show the number of days that the rebate applied. This is based on information provided to the Defence Force Pay Accounting Centre from the unit. |
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Tax exemption continues during accrued leave, but only if the member has qualified for the exemption. |
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Leave must be accrued in the operational area to be tax exempt. Like the normal calculation for leave, two days instead of weekends are added for each five days of leave. |
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The leave may be taken at any time and be tax exempt. This includes after the member has returned from the deployment. |
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... |
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For the period that a member earns exempt income under section 23AG, any benefits received by the member that were directly related to the non-warlike service are not subject to fringe benefits tax. However, benefits received by the member irrespective of the non-warlike service continue to be subject to FBT. Defence pays the FBT. Example: Ongoing benefits such as loan subsidies, Higher Education Contribution Scheme payments etc, continue to be subject to FBT, while benefits directly related to the non-warlike service, such as meals and certain annual leave travel would not be subject to FBT. |
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Since 1999-2000, all employers (including Defence) are required to report the 'grossed up taxable value' of fringe benefits on all employees' payment summaries if the total taxable value of fringe benefits in a FBT year (1 April to 31 March) is more than AUD 1,000. |
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If a member considers that the 'reportable fringe benefits amount' on their annual payment summary (formerly called group certificate) was incorrectly reported, they should contact the Defence Tax Management Office. See: PACMATE Part 3 Division 1 clause 3.7, Defence Tax Management Office. See also: PACMATE Part 3, Tax issues. |