By
CPL Cameron Jamieson
Navy
veterans of the UN mission in Rwanda have been placed in a taxation
holding pattern following the decision of the Australian Tax Office
(ATO) to review part of the tax law.
Recent tax rulings have allowed veterans of other overseas operations,
such as the Peace Monitoring Group in Bougainville, to claim a
refund for the income tax they paid while on operations.
It’s believed that up to 10 Navy personnel could be affected by
the decision.
In the case of Rwanda, the ATO had already begun making refunds
when the process was placed on hold.
As a result, the ADF had to withdraw Defgram 72/2004, which advised
ADF personnel of their ability to claim exemption of income tax
for their service in Rwanda.
Many Rwandan veterans have been angered by the ATO’s tax-freeze,
and those who have received the $7000-plus refund have been advised
they may have to pay it back.
The issue lies with the ATO’s interpretation of Section 23AG of
the Income Tax Assessment Act of 1936.
Under sub-section 1, an Australian resident who has worked overseas
for a continuous period exceeding 91 days may be exempt from tax.
Unfortunately for the Rwandan veterans, sub-section 2 lists a
number of reasons why sub-section 1 may not apply.
It is within sub-section 2 that the ATO is reviewing its interpretation
of the tax law.
For ADF members to be exempt from tax, Australia must not be a
party to an international agreement covering the privileges and
immunities in relation to persons connected with international
organisations, such as the UN.
Defence’s Director of Tax Management, Mr Diva Divakaran, said
that in the case of Rwanda, the only parties to the UN agreement,
for the purposes of Section 23AG, were the UN and Rwanda.
“Defence considers that Australia was not a party to the agreement
and believes that the tax exemption should apply to ADF personnel
who served in Rwanda,” Mr Divakaran said.
“The Australian Taxation Office is reviewing this position and
is seeking independent legal advice on the nature of the UN-Rwanda
agreement and other similar agreements with countries such as
Mozambique, Syria/Lebanon and Western Sahara.
“Defence is working with the ATO and will resolve the issue by
July 31, 2004.”
An ATO spokesman said it was a priority issue and that the ATO
was mindful of the impact on ADF members.
The spokesman said the ATO was working with the Attorney General’s
Department and the ADF to resolve the issue as quickly as possible.
