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Edited version of your written advice

Authorisation Number: 1051220755978

Date of advice: 3 May 2017

Ruling

Subject: International Organisation Salary

Question

Is the remuneration you receive for services performed in Australia for the overseas organisation as an employee assessable under subsection 6-5(2) of the ITAA 1997?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 2017

Year ending 30 June 2018

The scheme commences on:

1 January 2017

Relevant facts and circumstances

You are an Australian resident for taxation purposes.

You are a citizen of Australia.

You are an employee of the overseas organisation.

From X to Y you worked for the overseas organisation in Australia.

From Y to Z you took up an offer to continue working for the overseas organisation in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 6-5(2).

Income Tax Assessment Act 1997 Section 6-15.

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 will include 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.

Taxation Ruling TR 92/14 Income tax: taxation privileges and immunities of prescribed International Organisations and their staff (TR 92/14) discusses the operation of privileges and immunities relating to taxation that apply to International Organisations and persons working for these organisations.

Overseas organisation (Privileges and Immunities) Regulations 1970 were made under the IO(P&I)A. Subsection 5(1) of the IO(P&I)A provides that the regulations may declare an organisation to be an organisation to which this Act applies. Paragraph 3(1)(b) of the IO(P&I)A defines the term an 'international organisation to which this Act applies' to mean an organisation that is declared by the regulations to be an international organisation to which this Act applies, and includes a body established by such an organisation.

The overseas organisation is an international organisation to which the IO(P&I)A applies.

Subparagraph 6(1)(d)(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 1 of the Fourth Schedule upon a person who holds an office in an international organisation to which this Act applies, not being an office prescribed by the relevant regulations as a high officer.

Taxation Determination TD 92/153 Income tax: who is a 'person who holds an office' as specified in various regulations made under the International Organisations (Privileges and Immunities) Act 1963 (TD 92/153) provides that the phrase 'person who holds an office' in an international organisation covers those people who work as employees for the organisation but does not include persons who are locally engaged by the organisation and paid at an hourly rate or engaged by the organisation as experts or consultants.

You are the holder of an office with the overseas organisation as you are an employee.

Regulation A says:

The salary and emoluments received from the organisation by a person who holds an office in the organisation, being a resident of Australia within the meaning of the Income Tax Assessment Act 1936 are not, to the extent to which they are for services rendered in Australia, exempt from taxation unless the person is not an Australian citizen and came to Australia solely for the purpose of performing duties of the office in the Commission held by him.

You carried out work for the overseas organisation in Australia from X to Y and you commenced work for the overseas organisation in Australia from Y to Z.

You are a resident of Australia for the period you are working for the overseas organisation in Australia and you are a citizen of Australia.

The payments you receive for work performed for the overseas organisation in Australia are not exempt from tax and these payments must be included in your Australian tax return.

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