Austrade works in conjunction with the Australian Taxation Office ('ATO') to administer the income tax exemption available under section 23AF of the Income Tax Assessment Act 1936 ('Tax Act').
The Minister for Trade has delegated to Austrade the power to grant approved project status for the purposes of section 23AF. The ATO is responsible for the administration of the income tax system in accordance with the Tax Act. An income tax exemption under section 23AF is subject to the ATO being satisfied that all the requirements for exemption have been met.
Section 23AF should assist the international competitiveness of Australian companies and Governmental organisations competing to win international tenders. This is achieved by granting an exemption from Australian income tax for the earnings of Australian individuals whilst working overseas on approved eligible projects for more than 90 days. The tax exemption should permit project costs to be at an internationally competitive level that is, in comparison to foreign companies which may operate under similar tax concessions.
The exemption typically applies to projects in countries where income tax is not levied on employment income, such as in a number of Middle Eastern countries, or where income tax is not levied on foreign workers because the project is funded by an international development agency such as the World Bank or Asian Development Bank.
To qualify for the exemption, an employee or contractor must derive eligible foreign remuneration whilst engaged in a qualifying service on an approved eligible project for a continuous period of more than 90 days.
An exemption under section 23AF will be available where:
An eligible project is:
a) Projects for the development of natural resources
b) Projects for the supply of agricultural services carried out on behalf of a government, public utility or a corporation owned by a government or operating under government authority.
c) Development, installation, management or administration of medical programs and facilities.
In determining whether a project is in the national interest, Austrade relies on the following criteria set by the Minister for Trade ('Minister's Criteria'):
Note: Minister's Criteria 6, 7 and 10 require specific consideration or requirements to be complied with regarding eligibility.
After reviewing the eligibility, submit the 23AF Application Form (DOCX 146KB).
If lodging a renewal application, please ensure you lodge the application at least 30 days before the expiry date of the current approved period.
Austrade reserves the right to assess each application or renewal independently on its merits. Each approval is on a case by case examination of eligibility under the legislative criteria.
Austrade is under no obligation to undertake an internal review process in relation to decisions made under section 23AF of the Income Tax Assessment Act 1936.
Applications for approved project status should be submitted via email to:
Section 23AF Exemptions
Whilst Austrade is responsible for granting approved project status, the ATO is responsible for the administration of the income tax system in accordance with the laws set out in the Tax Act, such as section 23AF. An income tax exemption under section 23AF is subject to the ATO being satisfied that all the requirements for exemption have been met.
An income tax exemption under section 23AF is available for eligible foreign remuneration derived by an individual who is engaged in qualifying service on an approved project for a continuous period of more than 90 days.
The basic requirement is that of a continuous period of more than 90 days absence from Australia while engaged on the approved eligible project. However, the provision also allows for the exemption to continue in some cases where a qualifying individual returns to Australia for a short period of time.
Eligible foreign remuneration is income that is directly attributable to service by an individual on an approved project, being:
However, eligible foreign remuneration does not include income that is:
Eligible contractor means:
Qualifying service on an approved project is the time that an individual:
Qualifying service may also include the time that an individual:
Approved eligible project means a project that is approved in writing by the Minister for Trade or approved delegate (currently Austrade).
Individuals who are entitled to full or partial exemption under section 23AF will need to obtain the project approval number from their employer when lodging an income tax return in Australia as usual. Income that is eligible foreign remuneration should be included in the individual's tax return as exempt foreign income.
Note: Approved overseas projects income is taken into account in calculating Australian tax payable on other income derived by the individual. Tax on the non-exempt income is calculated by applying a notional average rate of tax payable on the sum of the exempt and non-exempt income.
To read the full text of section 23AF of the Income Tax Assessment Act, please visit ATO website, Section 23AF. For more information on income tax and the exemption requirement in section 23AF, visit the ATO website.
Within Australia you can also telephone the ATO on: