What this determination covers
The Australian Taxation Office has published a compendium summarising submissions received during consultation on TD 2012/8, a tax determination about what counts as foreign service under section 23AG of the Income Tax Assessment Act 1936.
The core rule
The determination confirms a strict rule: time spent in Australia, international waters, or international airspace does not count as foreign service. There is no discretion based on the reason for the trip, whether it was work-related, mandatory training, or anything else.
When the updated determination applies
The updated determination applies from the 2026-27 income year onward.
PAYG withholding and payroll
Payroll and PAYG withholding processes are required to correctly treat any time staff spend in Australia as taxable from 1 July 2026. The ATO acknowledged that payroll system changes take time, and stated that employers facing difficulties can contact the ATO directly so arrangements can be made.
FBT treatment
The ATO confirmed that overseas staff moving in and out of tax-exempt status affects FBT treatment as well.
Key actions
- Review payroll and PAYG withholding processes for staff posted overseas who return to Australia periodically - time spent in Australia by those staff is taxable from 1 July 2026, with no exceptions for work trips, training, or business meetings.
- Check whether FBT obligations for overseas-based staff are also affected by the change in tax-exempt status.
- If payroll systems cannot immediately handle the change, contact the ATO directly to arrange a compliance pathway.
- Track further changes to this determination at the official ATO source page for TD 2012/8EC2.
This is a plain-English summary for information only, not legal or compliance advice. Always check the official source or consult a qualified professional.