| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011609068805
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Foreign income
Is the income you earned as a consultant to the Asian Development Bank (ADB) in overseas countries exempt from tax in Australia?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2010
Year ending 30 June 2011
Year ending 30 June 2012
The scheme commences on:
1 July 2009
Relevant facts and circumstances
You are an Australian resident for taxation purposes.
You are contracted by an Australian company to the Asian Development Bank Project.
You provide expert technical assistance and consulting services across the project, manage the teams in each country and prepare reports.
Your consulting fee is paid by the Australian company and is reimbursed to the Australian company by the ADB.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
Income Tax Assessment Act 1997 Subsection 6-15(2)
Income Tax Assessment Act 1997 Section 6-20.
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived from all sources, whether in or out of Australia, during the income year.
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 International Organisations (Privileges and Immunities) Act 1963 (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.
The Commissioners guidelines as to the assessability of remuneration derived from International Organisations are dealt with in Taxation Ruling TR 92/14.
Paragraph 12 of TR 92/14 provides that Australia's general policy is that salaries and emoluments received by experts and consultants engaged by international organisations are not exempt from tax in Australia. However, limited exemption is provided under regulations regarding the ADB.
Sub-regulation 7(1) of the ADB Regulations provides that a person who is performing, whether alone or jointly with other persons, a mission on behalf of the ADB has the privileges and immunities specified in paragraphs 2, 2A and 5 of Part I of the Fifth Schedule to the IOPIA.
However, sub-regulation 7(2) of the ADB Regulations provides that salary and emoluments received from the ADB by a person on whom privileges and immunities are conferred by sub-regulation 7(1), being an Australian resident, are not exempt from taxation, to the extent to which they are for services rendered in Australia.
The term 'emoluments' include payments made to an expert in respect of their services which are remunerations, or at least an 'advantage' obtained as a result of giving those services.
In your case, you are an Australian resident, and you are paid a fee for consultant services performed for the ADB in Australia and overseas countries.
The payment you receive for work performed for the ADB in overseas countries is exempt from tax under sub-regulation 7(1) of the ADB Regulations as the payment is an emolument received while performing services for the ADB overseas.
Accordingly the payment for work rendered in overseas countries is not assessable under subsection 6-5(2) of the ITAA 1997 as the payment is exempt under section 6-20 of the ITAA 1997.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
