ATO Interpretative Decision

ATO ID 2004/866 (Withdrawn)

Income tax

Assessability of professional income received by an Australian resident working partly in Australia and partly outside Australia as a consultant to an international organisation
FOI status: may be released
  • This ATO ID is withdrawn as it is no longer required following the publication of Draft Taxation Ruling TR 2019/D1 Income Tax: income of international organisations and persons connected with them that is exempt from income tax on 27 March 2019.
    This document has changed over time. View its history.

Status of this decision: Decision withdrawn 27 March 2019.
CAUTION: 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.

Issue

Is the income derived by an Australian resident taxpayer as a consultant to the International Bank for Reconstruction and Development (the World Bank) for the provision of independent professional services, carried out partly in Australia and partly outside Australia, assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. The income derived by an Australian resident taxpayer as a consultant to the World Bank for the provision of independent professional services carried out partly in Australia and partly outside Australia, is assessable under subsection 6-5(2) of the ITAA 1997. The income is not exempt from tax under the International Organisations (Privileges & Immunities) Act 1963 (the IO(P&I)A) and the Specialised Agencies (Privileges & Immunities) Regulations 1986 (the SA(P&I) Regs) which were made under the IO(P&I)A.

Facts

The taxpayer is a resident of Australia for income tax purposes.

The taxpayer was engaged by the World Bank to provide independent professional services in the capacity of a consultant.

Most of the work was performed in Australia and some outside Australia.

The taxpayer is not an officer or employee of the World Bank.

Reasons for Decision

Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident will include ordinary income derived from all sources, whether in or out of Australia, during the income year.

Income from professional services is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.

However, subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income.

Section 6-20 of the ITAA 1997 provides that an amount of ordinary income is exempt income if it is made exempt from income tax by a provision of the ITAA 1997 or another Commonwealth law.

The IO(P&I)A is a Commonwealth law under which an international organisation, and persons engaged by it, may be accorded certain privileges and immunities including an exemption from tax.

Subparagraph 6(1)(e)(i) of the IO(P&I)A provides that the regulations may confer all or any of the privileges and immunities set out in Part I of the Fifth Schedule of the IO(P&I)A upon a person who serves on a committee, or, participates in the work of, or, performs a mission on behalf of, an international organisation to which this Act applies.

The World Bank is listed in the Schedule to the SA(P&I) Regs. The SA(P&I) Regs are made under section 6 the IO(P&I)A.

Regulation 9 of the SA(P&I) Regs does not provide any income tax exemption for persons serving on a committee or performing a mission (such as independent consultants) for the World Bank.

Accordingly, the income derived by an Australian resident taxpayer as a consultant to the World Bank for the provision of independent professional services carried out partly in Australia and partly outside Australia, is assessable under subsection 6-5(2) of the ITAA 1997.

Date of decision:  6 August 2004

Year of income:  Year ended 30 June 2003 Year ended 30 June 2004

Legislative References:
Income Tax Assessment Act 1997
   subsection 6-5(2)
   subsection 6-15(2)
   section 6-20

International Organisation (Privileges and Immunities) Act 1963
   subparagraph 6(1)(e)(i)

Specialized Agencies (Privileges and Immunities) Regulations 1986
   Regulation 9

Keywords
Diplomatic privileges & immunities
Exempt income
International agencies
International tax
United Nations & UN agencies

Siebel/TDMS Reference Number:  3983206

Business Line:  Small Business/Individual Taxpayers

Date of publication:  5 November 2004

ISSN: 1445-2782

history
  Date: Version:
  6 August 2004 Original statement
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