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ATO Interpretative Decision

ATO ID 2001/88 (Withdrawn)

Income Tax
Income tax: Exempt income - Defence Reserve

Attention This ATO ID is withdrawn. This ATO ID is a straight application of the law. Guidance on the view contained in this ATO ID can be found in Employment Income (QC 31914).
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 25 January 2018.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


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?


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).


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 decision: 21 August 1998

Legislative References:
Income Tax Assessment Act 1997
   section 51-5

Defence Force Members
Exempt income

Siebel/TDMS Reference Number: WAY43514.PBV; 1-BU2ZAQ6

Business Line: Small Business/Individual Taxpayers

Date of publication: 3 July 2001

ISSN: 1445-2782

ATO ID 2001/88 (Withdrawn) history   Top  
   Date   Version 
   21 August 1998   Original statement   
   18 October 2013   Updated statement   
 You are here ®  25 January 2018   Withdrawn   


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