What this update covers
The Australian Taxation Office has issued an addendum to its ruling TD 2012/8, now cited as TD 2012/8A1. The ruling concerns when temporary absences from overseas work still count as part of a continuous period of foreign service under section 23AG of the Income Tax Assessment Act 1936.
Key clarifications
Returns to Australia during overseas postings
The addendum clarifies that short, unexpected work-related absences from a foreign country where a person returns to Australia are not treated as part of continuous foreign service.
Work in international waters or airspace
Service performed on international waters or in international airspace does not count as foreign service under section 23AG. Only service physically performed in a foreign country qualifies.
When this addendum applies
This addendum applies from the 2026-27 income year onwards.
Key actions
- For businesses employing staff working overseas or managing payroll for workers on foreign postings, the ruling requires a check of whether absences from the foreign country - including returns to Australia - could affect a worker's foreign income tax exemption under section 23AG.
- For workers performing duties on ships or aircraft in international waters or airspace, the ruling makes clear that this time does not count as foreign service for the section 23AG exemption.
- The consolidated version of TD 2012/8 as amended is available on the ATO legal database at https://www.ato.gov.au/law/view/document?docid=TXD/TD20128A1/NAT/ATO/00001. It includes worked examples covering recreation leave, sick leave, carer's leave, workers' compensation, and the one-sixth legislative rule.
This is a plain-English summary for information only, not legal or compliance advice. Always check the official source or consult a qualified professional.