From 1 July 2009, the income tax exemption for foreign employment income (under s.23AG of the ITAA 1936) will only apply to income earned as:

• An aid or charitable worker employed by a recognised non-government organisation;
• A government aid worker, or;
• A specified government employee (e.g., defence and police force personnel deployed overseas).

Furthermore, income earned by an individual employed on an overseas project approved by the minister for Trade as being in the national interest will remain exempt, as provided for by existing rules (i.e., under s.23AF).

Currently, certain foreign employment income earned by Australians working overseas for a continuous period of 91 days or more is generally exempt from Australian Income Tax.

From 1 July 2009, foreign employment income will generally become taxable and taxpayers will be entitled to a foreign income tax offset for foreign tax paid on the foreign employment income.