Overview

The Income Tax Assessment (1936 Act) Amendment (Operation Steadfast Eligible Duty) Regulations 2019 were enacted to address the need for Australian Defence Force (ADF) personnel serving on Operation Steadfast in Iraq to have their remuneration exempted from income tax, ensuring they are treated similarly to those on other specified eligible duties. The Australian Parliament enacted this amendment to the Income Tax Assessment Act 1936 through the Assistant Treasurer, reflecting the policy objective of providing tax relief to ADF members on specific duty outside Australia. The regulations aim to classify Operation Steadfast as 'eligible duty', thereby enabling a continuous exemption from income tax for ADF members engaged in this operation, in alignment with section 23AD of the Act. The regulations came into effect on 10 September 2018, the date of their registration, and do not disadvantage any individual, including those retrospectively affected by the changes.

Scope and Application

The Income Tax Assessment (1936 Act) Amendment (Operation Steadfast Eligible Duty) Regulations 2019 amends the Income Tax Assessment (1936 Act) Regulation 2015 to ensure that duty performed by Australian Defence Force personnel serving on Operation Steadfast is recognised as 'eligible duty' under section 23AD of the Income Tax Assessment Act 1936. This amendment allows the remuneration of ADF personnel on this operation to be exempted from income tax on an ongoing basis. The exemption applies to ADF personnel who are serving on Operation Steadfast in the land area, territorial waters, airspace and superadjacent airspace of Iraq, provided the Chief of the ADF has issued a certificate to that effect and the duty is not performed as, or under, an attaché at an Australian embassy or legation. The Amending Regulations apply to ADF personnel deployed on Operation Steadfast from 9 September 2018, the date of their first deployment. The Amending Regulations do not include any specific exclusions or exemptions, and the regulations have a negligible compliance cost impact. The Amending Regulations are a legislative instrument under the Legislation Act 2003 and have been determined to be compatible with human rights as outlined in the Statement of Compatibility with Human Rights.

Key Provisions

The Income Tax Assessment (1936 Act) Amendment (Operation Steadfast Eligible Duty) Regulations 2019 (the Amending Regulations) make important amendments to the Income Tax Assessment (1936 Act) Regulation 2015 (the Regulation). The primary objective of these regulations is to ensure that service by Australian Defence Force (ADF) personnel on Operation Steadfast is considered ‘eligible duty’ for the purposes of section 23AD of the Income Tax Assessment Act 1936 (the Act). This amendment allows for the exemption of income tax on the remuneration of ADF members serving on Operation Steadfast (section 6). Section 23AD of the Act stipulates that ADF members’ remuneration is exempt from tax if they are on ‘eligible duty’ outside Australia with a specified organisation and provided the Chief of the ADF issues a relevant certificate. This exemption continues until the member leaves the specified area, the certificate is revoked, or until a specified time as determined by regulations. Under the Amending Regulations, Operation Steadfast, conducted in Iraq's land area, territorial waters, airspace, and superadjacent airspace, is now recognised as ‘eligible duty’. This means that ADF personnel serving in this operation will have their remuneration exempt from income tax. The Amending Regulations apply from 9 September 2018, which is the date ADF personnel were first deployed on Operation Steadfast. This retrospective application ensures that ADF members already serving in the operation benefit from the tax exemption without any disadvantage. The obligations imposed by the Amending Regulations primarily concern the Chief of the ADF, who must issue a certificate for ADF personnel serving on Operation Steadfast, confirming their status as being on ‘eligible duty’. This certification is necessary for the tax exemption to apply. The Amending Regulations also specify that the exemption continues until the member leaves the operation area, the certificate is revoked by the Chief of the ADF, or until a time specified by the regulations, whichever occurs first. Failure to comply with the requirements of the Amending Regulations could lead to tax liabilities for ADF personnel serving on Operation Steadfast, as their remuneration would no longer be exempt from income tax. While the Act does not explicitly outline penalties for non-compliance, the general tax laws and penalties applicable under the Income Tax Assessment Act 1936 would apply. These penalties can include fines and interest on unpaid taxes, which could be substantial depending on the amount of tax evaded. Additionally, the Chief of the ADF's failure to issue the required certificate or to revoke it appropriately could also result in administrative or legal consequences.