On 14 August 2013, the ATO issued Taxation Determination TD 2013/18 entitled "Income tax: are foreign earnings derived by Australian Defence Force (ADF) members from a period of leave as a result of an accident or illness that occurred while deployed overseas as a member of a disciplined force exempt under section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936)?"
It was previously released in draft form as TD 2013/D2.
The answer given is as follows:
"Yes. Foreign earnings derived by an ADF member from a period of leave as a result of an accident or illness that occurred while deployed overseas by the ADF as a member of a disciplined force are exempt under s 23AG of the ITAA 1936 where the earnings are derived during the period the ADF member would otherwise have remained deployed overseas had the accident or illness not occurred and all the other requirements of s 23AG are satisfied.
...The period of foreign service ends when:
- the ADF member would have returned from the deployment but for the accident or illness; or
- the ADF member resumes duty in Australia; or
- the ADF member receives a medical discharge,
whichever occurs the earliest."