In media release No 2010/57, issued on 1 April 2010, the Assistant Treasurer, Senator Nick Sherry, has moved to provide additional clarity on specific issues raised by industry regarding the implementation of changes to the taxation of Australian residents employed overseas.
The 2009-10 Budget measure meant that from 1 July 2009, the foreign employment income of most Australians working overseas was no longer exempt from Australian income tax. It is instead included in the assessable income of the employee and subject to the appropriate marginal tax rates, with an offset for any foreign tax paid. The measure also brought overseas based Australian employees into the FBT base for the first time.
"I can confirm today that these taxpayers will not be required to lodge a foreign tax return to demonstrate and claim amounts of foreign tax paid. All they will be required to do is to keep their normal pay slips, assuming they identify amounts withheld, and under our self-assessment regime these pay slips will only need to be provided if the Tax Office undertakes an audit," the Assistant Treasurer said.
In relation to the FBT liability on fly-in-fly-out arrangements that are common in the mining sector, the Assistant Treasurer said:
"Following this process I can announce that the Tax Office has indicated that there is no impediment to the 'otherwise deductible' rule that applies within Australia also being applied to overseas fly-in/fly-out arrangements that are factually similar in nature other than the difference of one being domestic and one being international."