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Wednesday, 26 March 2003
Page: 10203


Senator EGGLESTON (2:13 PM) —My question is to Senator Coonan, the Minister for Revenue and Assistant Treasurer. Will the minister inform the Senate what tax concessions are available to members of the Australian Defence Force currently deployed in the international effort to disarm Iraq?


Senator COONAN (Minister for Revenue and Assistant Treasurer) —I thank Senator Eggleston for the question. At a time when Australia's defence forces are playing such a crucial role in Operation Falconer, the coalition operation to disarm Iraq, I am pleased that the ADF personnel have the support of the overwhelming majority of the Australian people. I cannot speak too highly of the bravery and commitment of our defence forces and am pleased to be able to advise this chamber that the pay and allowances of the ADF members currently in Iraq are exempt from income tax.

This exemption is a result of these ADF members being deployed on overseas duty that the Minister for Defence has declared to be warlike. The exemption comes under section 23AD of the Income Tax Assessment Act 1936, which allows an income tax exemption for the ADF pay and allowances of ADF members serving on eligible duty outside Australia. That exemption results from a three-step process involving a declaration by the Minister for Defence that the service is warlike, prescription under the Income Tax Regulations, and certification by the Chief of the Defence Force of an individual's participation.

The Minister for Defence, after consulting with the Prime Minister, declared that the service is warlike on 18 March this year. Warlike operations are those military activities where the application of force is authorised to pursue specific military objectives and there is an expectation of casualties. With this prerequisite in place, the next step is prescription under the Income Tax Regulations 1936. The final stage of the exemption process will be the Chief of the Defence Force certifying that particular ADF personnel have been on eligible duty.

The resultant income tax exemption is intended to recognise the duties, responsibilities and risks undertaken by ADF personnel. In addition, ADF personnel in Operation Falconer are entitled to an additional allowance, namely a specific allowance of $200 a day while serving inside Iraq, and an allowance of $125 a day elsewhere inside the Operation Falconer area of operations. The allowances are paid in recognition of the operational and environmental threats likely to be encountered on the deployment.

Senators will appreciate that these initiatives are consistent with benefits given to personnel in other operations. ADF members are receiving a tax exemption for eligible duty in East Timor and for eligible duty in Operation Slipper in the war against terrorism in the Middle East. Tax exemptions were also available in previous years for ADF members serving in a number of overseas localities, including Iraq and Kuwait, during the Gulf War.

Senators will also be aware that the government introduced into parliament, on 23 October last year, the Taxation Laws Amendment Bill (No. 7) 2002, which proposes to provide an exemption for compensation paid to ADF members for loss of a deployment allowance owing to injuries sustained while on eligible duty outside Australia. That of course ensures that, where an ADF member returns to Australia because of an injury sustained in service, the lump sum compensation payment received for the loss of the deployment allowance is exempt from tax. The government has undertaken these measures as part of its commitment to the military effort and support for the ADF personnel engaged in the Iraq campaign and their families, who can be assured of the full support of the government for them and their loved ones serving in the Middle East.