ATO Interpretative Decision

ATO ID 2001/604 (Withdrawn)

Income Tax

• ATO ID 2001/604 is withdrawn from the database because, following legislative changes which became effective on 14 September 2006, it is no longer current for years of income happening on or after 30 June 2006. Despite its withdrawal from the database, this ATO ID continues to be a precedential view in respect of decisions dealing with the application of paragraph 23(r) of the ITAA 1936 occurring before that date. An ATO ID dealing with the replacement legislation will issue shortly.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is a living allowance paid by the United Nations in respect of voluntary work in a foreign country to a non-resident of Australia, assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. The living allowance paid by the United Nations to the non-resident taxpayer is exempt from tax under subsection 23(r) of the Income Tax Assessment Act 1936 (ITAA 1936).

Facts

The taxpayer, a non-resident of Australia, is engaged in an overseas voluntary position with the United Nations.

The taxpayer is paid a monthly living allowance by the United Nations.

Reasons for Decision

Subsection 6-5(3) of the ITAA 1997 provides that ordinary income derived by a non-resident directly or indirectly from Australian sources as well as other ordinary income included by a provision on a basis other than having an Australian source is assessable. Statutory income from all Australian sources or included by a provision on a basis other than having an Australian source is also included in a non-resident's assessable income under subsection 6-10(5) of the ITAA 1997.

The source of a living allowance in respect of voluntary work is the place where the services are performed (French v. FC of T (1957) 98 CLR 398).

Income derived by a non-resident from sources outside of Australia (except where it is specifically included by a provision on a basis other than having an Australian source) is exempt from tax under subsection 23(r) of the ITAA 1936.

The taxpayer is a non-resident of Australia and the living allowance is not paid from an Australian source. The allowance is not included in the taxpayer's assessable income on another basis, therefore the allowance will not be assessable under section 6-5 of the ITAA 1997. Subsection 23(r) of the ITAA 1936 will apply to exempt from tax the living allowance paid to the taxpayer.

Legislative References:
Income Tax Assessment Act 1936
   subsection 23(r)

Case References:
French v. FC of T
   (1957) 98 CLR 398

Keywords
International Tax
Foreign Income
Living Allowance
Resident/Residency
United Nations & UN Agencies

Business Line:  Small Business/Individual Taxpayers

Date of publication:  22 November 2001

ISSN: 1445-2782