INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 1 - General  

SECTION 23  

23   EXEMPTIONS  
Subject to section 22A , the following income shall be exempt from income tax:

(a)    

[Official salary and ex-Australian income of Governor-General, Governor, representatives of other countries, etc]

the official salary of, and the income derived from sources out of Australia by, any person being -

(i) the Governor-General or the Governor of a State;

(ii) a representative in Australia of the government of any country (not being a person in relation to whom any of the provisions of the Vienna Convention on Diplomatic Relations, as having the force of law by virtue of the Diplomatic Privileges and Immunities Act 1967, apply or a person in relation to whom any of the provisions of the Vienna Convention on Consular Relations, as having the force of law by virtue of the Consular Privileges and Immunities Act 1972 , apply), or a member of the official staff of such a representative, if the representative or member, as the case may be, is not an Australian citizen and is not ordinarily resident in Australia and that country grants in relation to Australia exemptions from taxes upon income corresponding with the exemptions having effect in relation to that country by virtue of this subparagraph; or

(iii)

(Omitted by No 19 of 1967)

(vi) an officer of the government of a Commonwealth country, who is temporarily in Australia to render service on behalf of that country or the Commonwealth or a State in accordance with any arrangement between the governments of that country and of the Commonwealth or of a State, if the salaries of officers of the government of the Commonwealth temporarily in that country for similar purposes in accordance with a similar arrangement are exempted from income tax by that country;

(aa)    

(b)    

[Government remuneration to overseas expert]

the remuneration paid by the government of the Commonwealth or of a State to a non-resident for expert advice to that government or as a member of a Royal Commission;

(c)    

[Income of certain persons visiting Australia]

income derived -

(i)

(Repealed by No 114 of 2000)

(ii)

(Repealed by No 114 of 2000)

(iii) by the representative of any government, visiting Australia on behalf of that government, or by any member of the entourage of that representative, in his official capacity as such representative or member;

(iv) in the capacity of representative of any society or association established for educational, scientific, religious or philanthropic purposes, by any person visiting Australia in that capacity for the purpose of attending international or Commonwealth conferences or for the purpose of carrying on investigation or research for such society or association; and

(v) in the capacity of representative of the press outside Australia, by any person visiting Australia in that capacity for the purpose of reporting the proceedings relating to any matters referred to in the preceding subparagraphs;

(vi)

(Omitted by No 107 of 1989)

(d)    

[Income of local governing bodies and public authorities]

the revenue of a municipal corporation or other local governing body or of a public authority (other than an STB within the meaning of Division 1AB) constituted under any Act or State Act, or under any law in force in a Territory being part of Australia;

(e)    

[Income of religious, scientific, etc, institutions]

the income of a religious, scientific, charitable or public educational institution which:

(i) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or

(ii) is an institution to which a gift by a taxpayer is an allowable deduction because the institution is referred to in a table in subsection 78(4) ; or

(iii) is a prescribed institution which is located outside Australia and is exempt from income tax in the country in which it is resident; or

(iv) is a prescribed charitable or religious institution that has a physical presence in Australia but which incurs its expenditure and pursues it objects principally outside Australia;

(ea)    

[Income of public or non-profit hospitals]

the income of a public hospital, or of a hospital which is carried on by a society or association otherwise than for the purposes of profit or gain to the individual members of that society or association and which:

(i) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or

(ii) is an institution to which a gift by a taxpayer is an allowable deduction because the institution is referred to in a table in subsection 78(4) ; or

(iii) is a prescribed institution which is located outside Australia and is exempt from income tax in the country in which it is resident;

(eb)    

[Income of a registered medical, health benefits or hospital benefits organisation]

the income of an organization which -

(i) is a registered health benefits organization, a registered medical benefits organization or a registered hospital benefits organization for the purposes of the National Health Act 1953 , or of that Act as amended; and

(ii) is an organization carried on otherwise than for the purposes of profit or gain to the individual members of the organization;

(ec)    

(f)    

[Income of trade unions and employer associations]

the income of a trade union and the income of an association of employers or employees registered under any Act or State Act, or under any law in force in a Territory being part of Australia relating to the settlement of industrial disputes, and which is located in Australia and incurs its expenditure and pursues its objectives principally in Australia;

(g)    

[Income of non-profit society, association or club promoting certain activities]

the income of a society, association or club that:

(i) is a friendly society, not being a friendly society dispensary; or

(ii) is established for musical purposes, or for the encouragement of music, art, science or literature; or

(iii) is established for the encouragement or promotion of a game or sport; or

(iv) is established for the encouragement or promotion of animal races; or

(v) is established for community service purposes (not being political purposes or lobbying purposes);

and is a society, association or club not carried on for the purposes of profit or gain to its individual members which:

(vi) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or

(vii) is a society, association or club to which a gift by a taxpayer is an allowable deduction because the society, association or club is referred to in a table in subsection 78(4) ; or

(viii) is a prescribed society, association or club which is located outside Australia and is exempt from income tax in the country in which it is resident;

(h)    

[Income of non-profit aviation, tourism, agricultural and manufacturing associations]

the income of a society or association not carried on for the purposes of profit or gain to the individual members thereof, established for the purpose of promoting the development of aviation or tourism, or of the agricultural, pastoral, horticultural, viticultural, manufacturing or industrial resources of Australia;

(i)    

(j)    

[Income of public charitable and scientific research funds]

the incomes of the following funds, provided that the particular fund is being applied for the purpose for which it was established -

(i) (Omitted by No 110 of 1964)

(ii) a fund established by will before 1 July 1997 for public charitable purposes; and

(iia) a fund established in Australia by will or instrument of trust for public charitable purposes which:

(A) incurs, and has at all times since 1 July 1997 incurred, its expenditure principally in Australia and pursues, and has at all times since 1 July 1997, pursued its charitable purpose solely in Australia; or

(B) is a fund to which a gift by a taxpayer is an allowable deduction because it is referred to in a table in subsection 78(4) or is an ancillary fund as defined in subsection 78(5) ; or

(C) distributes solely, and has at all times since 1 July 1997 distributed solely, to a charitable fund, foundation or institution which, to the best of the trustee's knowledge, is located in Australia and incurs its expenditure principally in Australia and pursues its objects solely in Australia; or

(D) distributes solely, and has at all times since 1 July 1997 distributed solely, to a charitable fund, foundation or institution which, to the best of the trustee's knowledge, is a charitable fund, foundation or institution to which a gift by a taxpayer is an allowable deduction because it is referred to in a table in subsection 78(4) or is an ancillary fund as defined in subsection 78(5) ; and

(iii) a fund that is located in, and which incurs its expenditure principally in, Australia and that is established for the purpose of enabling scientific research to be conducted principally in Australia by or in conjunction with a public university or public hospital; or

(iv) a scientific research fund that is referred to in subsection 78(4) or 78(5) ;

(jaa)    

(ja)    

(jb)    

[Interest or dividends received by foreign superannuation, etc, funds]

the income of a provident, benefit, superannuation or retirement fund that, at all times during the year of income, was a foreign superannuation fund, being income that consists of -

(i) interest; or

(ii) dividends or non-share dividends paid by a company that is a resident;

(jc)    

[Income derived under CRAFT scheme]

income derived under the scheme known as the Commonwealth Rebate for Apprentice Full-Time Training by a person as an employer;

(jca)    

(jd)    

(je)    

[Income derived by Phosphate Mining Company of Christmas Island Ltd]

income derived by the Phosphate Mining Company of Christmas Island Limited, a company incorporated in the Australian Capital Territory;

(jf)    

[Income of Banaba Contingency Fund]

income of The British Phosphate Commissioners Banaba Contingency Fund that was established on 1 June 1981;

(k)    

[Income of Australian Film Finance Corporation]

income of Australian Film Finance Corporation Pty. Limited, being a company incorporated under the Companies Act 1981 on 12 July 1988;

(kaa)    

(kab)    

(ka)    

(kb)    

(kba)    

[Employment incentive]

payments by way of an open employment incentive bonus under Part VIIIA of the Handicapped Persons Assistance Act 1974 ;

(kc)    

[Pensions, etc, paid by a State of the Federal German Republic]

pensions, annuities and allowances paid as or by way of compensation by a State of the Federal Republic of Germany under the laws of that Republic relating to compensation of victims of National Socialist persecution;

(kca)    

[Pensions for resistance fighters and victims of wartime persecution]

payments of pensions, annuities and allowances -

(i) that are made under a law of the Federal Republic of Germany, being payments the entitlement to which depends in whole or in part upon the treatment as a period of contribution of a period during which the recipient or another person was a victim of, or a fugitive from, National Socialist persecution;

(ii) that are made under a law of the Kingdom of the Netherlands as or by way of compensation in respect of -

(A) the persecution, during the Second World War, of the recipient or another person by forces of an enemy of the Commonwealth, being forces occupying the Kingdom of the Netherlands or the former Dutch East Indies; or

(B) a disability arising out of the participation of the recipient or another person in the Dutch resistance movement in the Kingdom of the Netherlands during its occupation during the Second World War by forces of an enemy of the Commonwealth; or

(iii) that, not being payments to which subparagraph (i) or (ii) applies, are made under a law (including a law of the Federal Republic of Germany or of the Kingdom of the Netherlands) other than a law of the Commonwealth, a State or a Territory and, in the opinion of the Commissioner, are related to, or take into account -

(A) the persecution, during the Second World War, of the recipient or another person by forces of an enemy of the Commonwealth, or flight from such persecution; or

(B) a disability arising out of the participation of the recipient or another person in a resistance movement during the Second World War against forces of an enemy of the Commonwealth;

(kd)    

[Pension derived by PNG resident]

income derived by way of pension by a person who is a resident of Papua New Guinea and is not a resident of Australia if income derived by way of pension by a person who is a resident of Australia and is not a resident of Papua New Guinea is exempt from income tax under the income tax laws of Papua New Guinea;

(ke)    

[Mortgage and Rent Relief Scheme]

payments by way of rent subsidy made by, or by an authority of, the Commonwealth, a State or a Territory pursuant to the scheme known as the Mortgage and Rent Relief Scheme, where the payment is made to a person by reason that the person pays, or is liable to pay, rent;

(kf)    

[Franchise fees windfall tax]

taxable amounts on which tax is imposed by the Franchise Fees Windfall Tax (Imposition) Act 1997 ;

(kg)    

[Commonwealth places windfall tax]

taxable amounts on which tax is imposed by the Commonwealth Places Windfall Tax (Imposition) Act 1998 ;

(l)    

[Maintenance payments]

periodic payments (in this paragraph called ``maintenance payments'' ) in the nature of maintenance made by, or attributable to payments made by, a person (in this paragraph called the ``maintenance payer'' ), where:

(i) the maintenance payments are made:

(A) to a person who is or has been a spouse of the maintenance payer;

(B) to or for the benefit of a person who is or has been a child of the maintenance payer; or

(C) to or for the benefit of a person who is or has been a child of another person at a time when that other person is or was a spouse of the maintenance payer; and

(ii) the maintenance payer has not, for the purpose of making the maintenance payments or the payments to which they are attributable, as the case may be, divested himself or herself of any income producing assets or diverted from himself or herself income upon which he or she would otherwise have been liable to tax;

(m)    

(n)    

(o)    

[Income from gold-mining]

subject to Division 16H , income, other than income from the production, treatment or sale of pyrites, derived from the working of a mining property in Australia, where the working of the mining property by the taxpayer for the period from the commencement by him of mining operations on that property to the end of the year of income has been principally for the purpose of obtaining gold, or gold and copper, and where, in the latter case, the value of the gold obtained from that property by the taxpayer in that period is not less than two-fifths of the value of the output of that property in that period, other than the value of pyrites;

(pa)    

[Sale, etc, by bona fide prospector of rights to mine]

subject to Division 16H , income derived by a person before the 1997-98 year of income from the sale, transfer or assignment by the person of his rights to mine, in a particular area in Australia, for gold or for any prescribed metal or prescribed mineral, where:

(i) those rights to mine were acquired by the person before 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996; and

(ia) the income was derived before 20 August 2001; and

(ib) the person, on or before 20 August 1996 was a bona fide prospector, that is to say:

(A) a person (other than a company) who has personally carried out the whole or the major part of the field work of prospecting for gold or for the prescribed metal or prescribed mineral, as the case may be, in that area, or has contributed to the expenditure incurred in the work of prospecting and development in that area; or

(B) a company which has itself carried out the whole or the major part of such field work;

except that:

(ii) where the income was derived under a contract for the sale, transfer or assignment of the rights to mine entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996, this paragraph only applies to so much of the income derived as would have been derived if those rights had been sold for their market value at that time; and

(iii) where, under Division 10, or under the Division for which that Division was substituted, a deduction has been allowed or is allowable from the assessable income of the taxpayer of any year of income in respect of expenditure on exploration or prospecting in a particular area, this paragraph applies to so much only of the income of the taxpayer derived from the sale, transfer or assignment by him of rights to mine in that area as exceeds the sum of any deductions so allowed or allowable; and

(iv) this paragraph does not apply in respect of a sale, transfer or assignment of any right to mine for a metal or mineral, other than gold, if -

(A) any party or parties of the one part to the sale, transfer or assignment has or have the power (whether under the terms of the transaction or otherwise) to control, directly or indirectly, the entry into the transaction by, or the activities in connexion with the mining rights of, a party of the other part; or

(B) any person or persons has or have the power (whether under the terms of the transaction or otherwise) to control, directly or indirectly, the entry into the transaction by, or the activities in connexion with the mining rights of, a party of the one part and a party of the other part to the sale, transfer or assignment;

Note:

Subdivision 330-B of the Income Tax Assessment Act 1997 gives a genuine prospector an exemption from paying income tax on income derived in the 1997-98 year of income or a later year of income from the sale, transfer or assignment of rights to mine on a mining tenement in Australia.

(p)    

(q)    

(qa)    

(r)    

[Foreign source income of non-resident]

income derived by a non-resident from sources wholly out of Australia (except income that a provision of this Act includes in a taxpayer's assessable income on some basis other than having an Australian source);

(s)    

[Pay, etc, of member of Reserve Forces]

in the case of a member of the Australian Naval Reserve, the Australian Army Reserve or the Australian Air Force Reserve, the pay and allowances paid to him as such a member, other than pay and allowances in respect of continuous full time service;

(sa)    

[Pay, etc, of member of Emergency Reserve Forces]

in the case of a member of the Naval Emergency Reserve Forces, the Regular Army Emergency Reserve or the Air Force Emergency Force, the pay and allowances paid to him as such a member (other than pay and allowances in respect of continuous full time service) and any gratuity paid to him by reason of a calling out for continuous service of, or a part of, the Forces or Force of which he is a member;

(t)    

[Serviceman's allowances]

in the case of a member of the Defence Force -

(i)

(Omitted by No 26 of 1974)

(ii)

(Omitted by No 123 of 1978)

(iii) payments of any allowance or bounty of a prescribed kind payable to or in respect of the member; and

(iv) the value to the member of rations and quarters supplied without charge to him.

(u)    

[Pay, etc, of member of Forces of other countries]

in the case of any person enlisted in or appointed to the Naval, Military or Air Forces of the Government of any country outside Australia, the pay and allowances earned in Australia by him as a member of those Forces, if the pay and allowances are not paid, given or granted by the Commonwealth;

(v)    

[Remuneration of visitors assisting in defence of Australia]

income derived, by any person visiting Australia, from an occupation carried on by him while in Australia, if, in the opinion of the Treasurer, the visit and occupation are primarily and principally directed to assisting the Commonwealth government in the defence of Australia and the Treasurer is satisfied that the income is not exempt from income tax in the country where the person is ordinarily resident;

(w)    

(x)    

(y)    

(ya)    

[Commonwealth scholarships, bursaries, etc, provided to foreign students]

income derived by way of a scholarship, bursary or other educational allowance (being a scholarship, bursary or allowance provided by the Commonwealth) by a person who -

(i) is pursuing in Australia a course of study or training; and

(ii) is in Australia for the sole purpose of pursuing that course;

(z)    

[Scholarships, bursaries, etc, received by full-time students]

income derived by way of a scholarship, bursary or other educational allowance or educational assistance (other than assistance provided by the Commonwealth for secondary education or assistance provided by the Commonwealth in connection with the education of isolated children) by a student receiving full-time education at a school, college or university, but not including -

(i) an amount received by a student from a person or authority upon condition that the student will (or will if required) become, or continue to be, an employee of the person or authority;

(ia) an amount received by a student from a person or authority upon condition that the student will(or will if required) enter into, or continue to be a party to, a contract with the person or authority that is wholly or principally for the labour of the student;

(ib) an amount received by a student under a scholarship where the scholarship is not provided principally for educational purposes;

(ii) a Commonwealth education or training payment (see subsection 6(1) ); or

Note:

Although the payment is not exempt from income tax under this paragraph, the whole or part of the payment may be exempt under section 24ABZF .

(iii) an education entry payment received under Part 2.13A of the Social Security Act 1991 ;

(zaa)    

[Commonwealth secondary education assistance]

income derived by way of payments made to or in respect of a student under a scheme for the provision by the Commonwealth of assistance for secondary education or assistance in connection with the education of isolated children, but not including -

(i) a Commonwealth education or training payment (see subsection 6(1) ); or

Note:

Although the payment is not exempt from income tax under this paragraph, the whole or part of the payment may be exempt under section 24ABZF .

(ii) an education entry payment received under Part 2.13A of the Social Security Act 1991 ;

(za)    

[Grant by the Australian-American Educational Foundation]

income derived by way of payments under a grant made by the Australian-American Educational Foundation, being payments from funds made available to the Foundation under the Agreement dated 28 August 1964 between the Government of the United States of America and the Government of the Commonwealth under which the Foundation was established.