By Pte John Wellfare
SIGNIFICANT improvement in stability since peace enforcement operations began in 1999 means service in East Timor will no longer be automatically tax-free.

The nature of service for Operation Citadel changed from warlike to non-warlike with effect from August 18.

The changes affect conditions of service and relate to tax laws, under which ADF members on warlike service are automatically exempt from paying tax, while non-warlike service requires certain conditions to be met by the individual in order to achieve a tax exemption.

Assistant Director Tax Development, Defence Tax Management Office Pat Laria, said the change in the nature of service had brought changes to service conditions.

“When you go from warlike to non-warlike there are tax implications, particularly in relation to exempt income,” he said.

Members serving in East Timor before August 18 this year were exempt from paying tax under section 23AD of the Income Tax Assessment Act.

With that particular exemption no longer applicable, in certain situations, members may still be eligible to claim tax exemptions under section 23AG.

Unlike the warlike exemption, these amounts will increase the tax payable on Australian income.

“People should know that 23AG is not an automatic tax exemption.

“The legislative intent is to prevent double taxation and not to afford a tax exemption.”

ADF members serving in East Timor after August 18, 2003 are advised to consult their accountant or the ATO to determine eligibility for tax exemption.

.