CASE 30/96
Members:DW Muller SM
Tribunal:
Administrative Appeals Tribunal
DW Muller (Senior Member)
This is an application to review a decision dated 7 August 1995 to disallow an objection in full against a Private Binding Ruling dated 11 October 1994, which determined that the applicant's pension, which he now receives consequent upon his having been an officer of the World Bank before he retired, is not exempt from liability to income tax.
2. This matter was heard in Brisbane on 22 January 1996. The applicant was represented by his accountant, Mr. Wruck, and the respondent was represented by Mr. Newton of Counsel.
3. The material placed before the Tribunal consisted of the section 37 statement and an agreed statement of facts.
4. I find the facts to be as follows:
- (i) The applicant was born on 17 January 1931.
- (ii) The applicant was employed by the World Bank for approximately nine years from 1973 until June 1982. He served in Guinea, Sudan and Nigeria (among other places).
- (iii) The applicant was an officer of the bank. He was not the president of the bank, nor was he a managing director.
- (iv) During the applicant's employment with the World Bank he was eligible to contribute to a staff retirement plan and he elected to participate in that plan.
- (v) On 17 January 1993, the applicant turned 62 years of age and he applied for payment of a deferred pension from the plan. He elected to receive the pension rather than a lump sum.
- (vi) The plan envisaged that for employees with the applicant's history the pension became effective on the ``Normal Retirement Date'' which was the first of the month following the contributor's 62nd birthday. In the applicant's case that effective date was 1 February 1993.
- (vii) The applicant became a resident of Australia on 29 November 1993.
- (viii) The applicant received $7,296.52 from the plan by way of pension between 29 November 1993 and 30 June 1994.
- (ix) The applicant lodged an application for a private ruling with the Australian Taxation Office regarding the pension received from the plan during the 1993/1994 financial year. On 11 October 1994 the Australian Taxation Office ruled that the payment was assessable income.
- (x) On 18 November 1984 the applicant filed a notice of objection to the ruling. The objection was disallowed by the Australian Taxation Office on 7 August 1994.
- (xi) The World Bank encompasses the entities known as the International Monetary Fund and the International Bank for Reconstruction and Development.
5. The taxpayer claims that he is a person to whom the provisions of the International Organizations (Privileges and Immunities) Act 1963 (the Act), applies. In particular, the Tribunal was referred to section 6 of the Act, the fourth and fifth schedules to the Act and to the Specialized Agencies (Privileges and Immunities) Regulations 1986. The relevant provisions are as follows:
``Section 6 Privileges and Immunities of certain international organizations and persons connected therewith
(1) Subject to this section, the regulations may, either without restriction or to the extent or subject to the conditions prescribed by the regulations:
- ...
- (d) confer:
- (i) upon a person who holds an office in an international organization to which this Act applies (not being an office prescribed by the regulations to be a high office) all or any of the privileges and immunities specified in Part I of the Fourth Schedule; and
- (ii) upon a person who has ceased to hold such an office the immunities specified in Part II of the Fourth Schedule;
- (e) confer:
- (i) upon a person who is serving on a committee, or is participating in the work, of an international organization to which this Act applies or is performing, whether alone or jointly with other persons, a mission on behalf of such an organization all or any of the privileges and immunities specified in Part I of the Fifth Schedule; and
ATC 351
- (ii) upon a person who has served on such a committee or participated in such work or has performed such a mission the immunities specified in Part II of the Fifth Schedule.
- ...
FOURTH SCHEDULE Section 6
PART I
Privileges and Immunities of Officer (other than High Officer) of International Organization
...
2. Exemption from taxation on salaries and emoluments received from the organization.
...
PART II
Immunities of Former Officer (other than High Officer) of International Organization
Immunity from suit and from other legal process in respect of acts and things done in his capacity as such an officer.
FIFTH SCHEDULE Section 6
PART I
Privileges and Immunities of Person serving on Committee or participating in Work of, or performing Mission on behalf of, International Organization
1. Immunity from personal arrest or detention.
2. Immunity from suit and from other legal process in respect of acts and things done in serving on the committee, participating in the work or performing the mission.
2A. Exemption from taxation on salaries and emoluments received from the organization.
...
PART II
Immunities of Person who has served on Committee or participated in Work of, or performed Mission on behalf of, International Organization
Immunity from suit and from other legal process in respect of acts and things done in serving on the committee, participating in the work or performing the mission.
The Specialized Agencies (Privileges and Immunities) Regulations 1986:
...
Interpretation
2. In these Regulations, unless the contrary intention appears-
`Specialized Agency' means an agency specified in Column 2 of an item in the Schedule;
`the Act' means the International Organizations (Privileges and Immunities) Act 1963
...
Privileges and Immunities of Specialized Agencies
5. (1) Subject to sub-regulations (3) and (4), each of the following Specialized Agencies, namely:
- (a) the International Monetary Fund;
- (b) the International Bank for Recon- struction and Development;
- ...
has the privileges and immunities specified in the First Schedule to the Act.
...
Privileges and Immunities of officers (other than high officers) of Specialized Agencies
8. (3) A person who has ceased to hold an office in a Specialized Agency, other than an office specified in Column 3 of an item in the Schedule, has the Immunities specified in Part II of the Fourth Schedule to the Act.''
6. The representatives of the parties have raised three main points for consideration by the Tribunal.
- (i) Whether the pension received by the applicant is a ``salary or emolument'' within the meaning of those terms in the Fourth Schedule set out above.
- (ii) Whether the pension received by the applicant is referable to his work at the World Bank in the same way as a deferred or back payment for past services would be.
- (iii) Whether the applicant can be regarded as an officer of the World Bank or merely a former officer.
7. There was no evidence placed before the Tribunal as to what entity is actually paying the pension to the applicant. In the normal course of events, an eligible employee volunteers to pay part of his/her salary into a superannuation fund controlled by trustees. Upon retirement of the employee the trustees pay a pension from the fund to the former employee according to the regulations of the superannuation fund. It is the fund which pays the pension; not the former employer. I assume that there is some such arrangement in this case.
8. I take the view that the pension paid to the applicant from his superannuation fund is not similar to a back payment nor is it similar to a payment for the rendering of past services. The fact that participation in the fund was voluntary and that those who did not participate in the fund do not get a pension, presumably, negates any concept of the pension being paid for past services with the World Bank.
9. The applicant is not an officer of the World Bank. He is a former officer. He is entitled to the immunities set out in Part II of the Fourth Schedule (and may be Part II of the Fifth Schedule) but he is not entitled to the immunities contained in Part I of the Fourth Schedule (nor of Part I of the Fifth Schedule). Therefore, his pension is not exempt from taxation.
10. I find it unnecessary to decide whether a pension amounts to a salary or an emolument.
11. The decision under review is affirmed.
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