Issue
Are pay and allowances received as a defence reservist engaged on a contract of full-time service for a period with their defence Reserve exempt income?
Decision
No. As the taxpayer was engaged in continuous full-time service for the contracted period, the pay and allowances received as a reservist in respect of this period are not exempt income under section 51-5 of the Income Tax Assessment Act 1997 (ITAA 1997).
Facts
The taxpayer is a member of one of the Reserve branches of the Australian Defence Force.
During the year the taxpayer undertook, in accordance with the relevant defence legislation, several months of full-time service with the Reserve.
Reasons For Decision
All legislative references are to the ITAA 1997 unless otherwise stated.
Section 51-5 sets out the conditions under which certain Defence-related payments are exempt from income tax.
Item 1.4 of the table in section 51-5 prescribes that pay and allowances received as a member of any of the Australian Defence Force Reserves are exempt from income tax, except where the pay and allowances are for continuous full-time service.
The expression 'continuous full time service' is not qualified by the length of such service and includes any period of time for which the reservist is engaged in full-time employment with the Reserve. Pay or allowances received by the taxpayer as a reservist in respect of such employment is not exempt income.
Amendment History
Date of amendment Part Comment 17 October 2013 Issue Minor typographical error removed.
Date of amendment | Part | Comment
17 October 2013 | Issue | Minor typographical error removed.