Edited version of private advice

Authorisation Number: 1052381447243

Date of advice: 24 June 2025

Ruling

Subject: Exempt income - international organisation

Question 1

Does the International Organisations (Privileges and Immunities) Act 1963 apply to exempt you from tax in Australia under section 6-20 of the Income Tax Assessment Act 1997 (ITAA 1997) for the remuneration you derived from the Organisation whilst working outside of Australia?

Answer 1

No.

This ruling applies for the following periods:

Year ended 30 June 20YY

Year ended 30 June 20YY

The scheme commenced on:

DD MM 20YY

Relevant facts and circumstances

You are engaged by Organisation A on a Consultancy Contract from DD MM 2025 to DD MM 20YY, serving in City D, Country C.

The organisation is an entity within the United Nations (UN).

You are a Supply Chain Officer delivering in-country logistic services dedicated to strengthening the supply chain capacities of Organisation B and Organisation A's Partnerships including training.

In your Contract Offer dated DD MM 20YY, the terms and conditions include:

•                specifies your Contract Type as Short Term Monthly

•                Income Taxes - you may be exempt from paying income tax on your remuneration and other money disbursed by the entity, if the country to which you pay such taxes has acceded to the Convention of Privileges and Immunities of the Specialized Agencies and it chooses, based on its exclusive prerogative, to equate Consultants to "officials of the United Nations" for the purpose of this privilege.

•                excludes you from the Staff Pension Fund

•                the Staff Rules and Regulations.

You provided a copy of your job description with your Contract Offer detailing your Accountabilities and Responsibilities including:

•                Background and Purpose

•                Supply Chain Operations and Coordination

•                Team Leadership and/or Project Management

•                Storage requirements

•                Common Services: Logistics and Provision

•                Capability Building and Supply Chain

Your roles include being part of the project management team to erect a cold storage warehouse before the end of the calendar year for certain medicines.

You are also responsible for the procurement of mobile storage units to various locations in Continent B.

You are not a member of Boards, Commissions or other Bodies.

The result produced by your engagement in this position are:

•                At the end of the engagement, it is expected that warehouse will be built for cold storage medicines

•                Mobile storage units will be established in various locations in Continent B

•                Training, education and onsite support will be provided by you and your team on best practices of cold chain management and logistics.

The organisation chart provided show you report directly to Supply Chain Officer XX in City D, along with 2 other Consultant Supply Chain Officers and 2 Supply Chain Officers XX.

You do not have anyone reporting to you.

You do not engage any other person to perform any part of your work nor would you be authorised to engage the services on anyone else to perform the work apart from working collectively within the team.

There a multiple supply chain professionals strengthening the supply chain capacities of the Organisation B and Organisation A Partnership across Continent B and has been an ongoing program for many years.

Your position became available because the person in this role was deployed to City E to take on a different role and you were employed to replace this staff member. The role before you were employed is substantially the same as your current role, however there are different projects that come and go but capacity and manner in which a supply chain professional operates is materially the same.

Your hours of work are determined by the international organisation and you have no authority or power to determine the hours of work on your own accord.

Your Summary of Estimated Entitlements of the Regular Consultancy Contract provides that you are paid monthly remuneration and a monthly allowance in Currency G.

All costs that directly relate to you fulfilling your day-to-day role is paid for by the international organisation including travel costs to move from country to country to fulfill your role.

You chose to purchase a mobile phone and incurred mobile phone usage costs that you felt helped you keep in better communication with other members of the organisation and people you are working with. You also used the phone to make personal calls. You have not requested for these costs to be reimbursed by the organisation and therefore have not been compensated for these costs.

You have been provided a computer and sim card by the international organisation whilst working in Continent B.

Apart from the unpaid Absence and paid Compassionate and sick leave in your contract, you are not entitled to any other paid or unpaid leave.

You are primarily stationed in City D where you have an office on the business premises of Organisation B. This is the partner organisation to Organisation A where you represent the contribution to the Partnership. The Partnership also requires travel to various countries during your engagement to run the project and provide onsite training.

You have no authority or choice in determining where the work is to be performed. It is determined by the international organisation where and when you were required to relocate to Continent B, and where and when you are required to move to various Continent B countries during your time performing your role.

You have provided a copy of your United Nations Laissez-Passer (UN Passport). The Title states 'Official of Specialized Agency'.

The UN Passport was granted in relation to the current "Regular Consulting Contract'

•                you have not applied or accepted another contract with Organisation A, the UN or other UN Agency to commence when your current contract expires, but it is strongly likely your contract will be extended to the end of the calendar year and possibly beyond because your work is critical

•                the UN Passport is cancelled if you cease to work for the Organisation A or any other UN Agency as it is required upon separation otherwise there are serious consequences.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 section 6-5(2)

Income Tax Assessment Act 1997 subsection 6-15(2)

Income Tax Assessment Act 1997 Section 6-20

International Organisations (Privileges and Immunities) Act 1963

International Organisations (Privileges and Immunities) Act 1963 subsection 3(1)

International Organisations (Privileges and Immunities) Act 1963 subsection 6(1)

International Organisations (Privileges and Immunities) Act 1963 paragraph 6(1)(d)

International Organisations (Privileges and Immunities) Act 1963 subparagraph 6(1)(d)(i)

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

International Organisations (Privileges and Immunities) Act 1963 Second to Fifth Schedules

Specialized Agencies (Privileges and Immunities) Regulations 1986 of the Schedule column 2

United Nations (Privileges and Immunities) Regulations 1986 Section 3

United Nations (Privileges and Immunities) Regulations 1986 sub-regulation 10(1)

Reasons for decision

Assessable income

Section 6-5 of the ITAA 1997 provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources during the income year. This includes income derived from all overseas sources. However, subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income. then it is not assessable income.

An amount is exempt income under section 6-20 of the ITAA 1997, if it is made exempt from income tax by a provision of either the ITAA 1997 or another Commonwealth law. This includes income received by a person who is connected with an international organisation that is exempted by the IOPI Act.

Exemption of income under the IOPI Act 1963

Income of tax residents of Australia working for designated international organisations may be exempted from taxation in accordance with the IOPI Act. The application of these benefits to persons performing the work of the Organisation is provided in the Relevant Regulations.

The IOPI Act 1963 exempts from taxation certain income of a person connected with an international organisation, to the extent it satisfies all of these elements:

•                the income is received from an international organisation to which the IOPI Act applies;

•                the person is connected with the international organisation in one of the specified ways; and

•                the conditions and other particulars provided in the regulations for the international organisation are satisfied in relation to the income of the person.

Subsection 3(1) of the IOPI Act defines the term 'international organisation to which this Act applies' to mean an organisation that is declared by the 'regulations' to be an international organisation to which the IOPI Act applies, and includes a body established by such an organisation.

In your Contract Offer Terms and Conditions, clause 5 on Income Taxes mentions the Convention of Privileges and Immunities of Specialized Agencies and your UN Passport lists you as an Official of a Specialized Agency.

Regulation 2 of the Specialized Agencies (Privileges and Immunities) Regulations 1986 (SAPI Regulations) defines a Specialized Agency to mean any agency specified in column 2 of an item in the Schedule.

Column 2 of the Schedule -Specialized agencies-high officers lists the following agencies:

1.              International Labour Organisation

2.              Food and Agriculture Organization of the United Nations

3.              International Civil Aviation Organization

4.              United Nations Educational, Scientific and Cultural Organization

5.              International Monetary Fund

6.              International Bank for Reconstruction and Development

7.              World Health Organization

8.              Universal Postal Union

9.              International Telecommunication Union

10.          World Meteorological Organization

11.          International Maritime Organization

12.          International Finance Corporation

13.          International Development Association

14.          World Intellectual Property Organization

15.          International Fund for Agricultural Development

16.          United Nations Industrial Development Organization

Amendments were made to the SAPI Regulations in 2022, specifically regulations 9(9) and 9(10) where the following Agencies were added:

a)             the International Monetary Fund

b)             the International Bank for Reconstruction and Development

c)              the International Finance Corporation

d)             the International Development Association.

To date Organisation A is not listed as a Specialized Agency in the SAPI regulations. Therefore, for Australian taxation purposes, any income tax exemption that may be available under the SAPI regulations does not apply to people connected with this Organisation.

However, as Organisation A is an entity of the UN, the Commissioner considers that the relevant regulations are the United Nations (Privileges and Immunities) Regulations 1986 (the UNPI regulations). Under section 3 of the IOPI Act, the UN is an international organisation to which the IOPI Act applies.

It is noted that although Australia has acceded to both the Convention on the Privileges and Immunities of the Specialized Agencies and the Convention on the Privileges and Immunities of the United Nations, it is the IOPI Act along with the SAPI regulations and the UNPI regulations that are the relevant domestic law that apply to determine whether the payments an individual receives are exempt from taxation in Australia.

Subsection 6(1) and Part I of the Second to the Fifth Schedules to the IOPI Act inclusive set out the taxation exemptions that can be conferred upon certain persons currently connected with an international organisation.

This includes a person who 'holds an office' in an international organisation (but who is not a holder of a high office) under paragraph 6(1)(d) and Part I of the Fourth Schedule to the IOPI Act.

It also includes a person who is serving on a committee, participating in the work, or performing a mission for an international organisation under paragraph 6(1)(e) and Part I of the Fifth Schedule of the IOPI Act.

Relevantly, as per item 2 of Part 1 of the Fourth Schedule and item 2A of Part I of the Fifth Schedule of the IOPI Act, this includes an exemption from taxation on salaries and emoluments received from the international organisation.

Sub-regulation 10(1) of the UNPI regulations states that officers (other than high officers) of the United Nations are entitled to the privileges and immunities specified in items 1 to 7 of Part I of the Fourth Schedule to the IOPI Act.

Sub-regulation 11(1) of the UNPI regulations states that a person performing a mission on behalf of the United Nations is entitled to the privileges and immunities specified in items 1 to 6 of Part I of the Fifth Schedule to the IOPI Act.

It is noted that the UNPI regulations do not provide any privileges and immunities for people 'participating in the work' of the UN.

In your case, the payments you received in relation to your engagement with Organisation A will be exempt from income tax if it can be shown that you hold an office (but not a high office) in the United Nations in undertaking your role.

The Commissioner's view on the meaning of office holder

The Commissioner's view on the meaning of office holder is set out in paragraphs 24 to 34 of Draft Taxation Ruling TR 2024/D2 Income tax: exempt income of international organisations and persons connected with them (TR 2024/D2).

In determining who is an office holder, it is not enough to simply be an employee and thereby be regarded as an office holder. An office holder is someone who has identifiable duties, functions, responsibilities or powers to carry out. It does not include an employee who is merely following the command of a higher-ranking person. This does not take away from the fact that an office holder may be an employee; it illustrates however that a person who is an employee is not necessarily or automatically to be taken to be an office holder.

As specified in paragraph 26 of the ruling, the term 'office' cannot be defined by reference to permanence or succession. Whether a person holds or performs the duties of an office in an international organisation concerns the relationship between that person and that organisation.

Paragraph 27 of TR 2024/D2, states that whether someone is an office holder is a question of fact, considered on a case-by-case basis. There are six criteria for determining whether a person can be said to hold an office in an international organisation:

•                4 positive criteria:

°                a position to which certain duties attach - the office must exist within the international organisation regardless of the individual who occupies the office from time to time, that is if an individual vacates that office, the office continues to exist to be filled by another individual

°                duties relating to the performance of the organisation's functions - the office must have identifiable duties, functions and responsibilities or powers

°                a level of authority with respect to the organisation

°                the position of the person within the international organisation, and the duties and authority associated with it, should make it apparent why the privileges and immunities are conferred

•                2 negative criteria, the presence of which would indicate the person is not an office holder:

°                the position places the person outside the organisational structure

°                the position does not provide the person with any defined duties or authority with respect to the organisation and its functions - for example, the role is merely an advisory function.

Paragraph 29 of TR 2024/D2 explains an office holder can include a person who works as an employee of the international organisation, but an office holder does not include a person (whether an employee or not) who is:

•                locally engaged and paid an hourly rate, or

•                engaged as an expert or consultant.

The following example of an office holder is provided in paragraph 32 of TR 2024/D2:

Chris is employed by an organisation that is an international organisation covered by the IOPI Act (as per the Regulations for that organisation). The Regulations provide that income received from the organisation by an office holder of the organisation is income tax exempt and that there are no further conditions or particulars that apply to that exemption.

Chris leads a team that provides ongoing professional advice the organisation relies on to carry out its core functions. Chris has significant organisational responsibilities and functions, including developing organisational strategy and managing employees. He is also able to engage and enter contracts and make financial commitments on behalf of the organisation. If Chris was to leave the organisation, the vacancy would be filled as there is an ongoing need for the responsibilities and functions that he undertakes to continue to be performed. Chris is a person who is an office holder for the purposes of the IOPI Act.

The case law on the meaning of office holder

As per South Sydney District Rugby League Football Club Ltd v. News Ltd [2000] FCA 1541 (the South Sydney District Rugby League Football Club Ltd Case), in determining what the nature of a relationship was between two parties it is necessary to look at the form and substance of that relationship. It is not appropriate to adopt the label that one or more parties may have given to the relationship and let that determine what it is.

In FCT v. Jayasinghe [2017] HCA 256 (the Jayasinghe Case) it was discussed in paragraphs 31 and 34 that the term 'office' cannot be defined by reference to permanence or succession. Whether a person holds or performs the duties of an office in an international organisation concerns the relationship between the person and that organisation.

As per paragraph 37 of the Jayasinghe Case, the phrase 'a person holding an office in an international organisation' directs attention to the structure of the organisation and the place of the person in it. The substance of the terms of the engagement of the person and the relationship between that engagement and the organisation's performing its functions must be considered.

Whether someone is an office holder is a question of fact, considered on a case-by-case basis. It should be clear from the duties and authority associated with the person's position within the international organisation why the privileges and immunities are conferred.

Paragraph 38 of the Jayasinghe Case outlines that a person is unlikely to be an 'office holder' if their terms of engagement place them outside the organisational structure and do not include defined duties or authority in relation to the organisation and its functions. This is consistent with the purpose of the IOPI Act to confer privileges and immunities to assist organisations to perform their functions, rather than to personally benefit persons connected with the organisation (see paragraph [39] of the Jayasinghe case and paragraph [54] of Macoun v. FCT (2015) 257 CLR 519).

In Edwards v. Clinch [1982] AC 845 it was held that an office was a position of authority to which duties and functions are attached; an independent post, with some degree of permanence, to which successive people can be appointed.

In Federal Commissioner of Taxation v. Sealy (1987) 19 ATR 582 at 286; 87 ATC 5076, which concerned a managing partner of a grazing partnership, Pincus J said:

The word office has a range of meanings. In some contexts, it refers to a position of authority in a governmental or other public organisation. It is difficult to think of any reason why the legislature should have intended to confine the concession to instances in which the terminated position is one of a public character or of any high degree of permanency. Presumably, no one would dispute that the position of managing director of a public company could be regarded as an office.

In AAT Case 8603 93 ATC 148; 25 ATR 1082, Deputy President BJ McMahon dealt with the case of a taxpayer who had been an Inspector of Schools and who became (when that position phased out) a Cluster Director. Paragraphs [14] and [15] read as follows:

14. The word "office" is a word that had been considered in many cases, but no satisfactory definition has emerged. As was pointed out in Grealy's case [Grealy v. Commissioner of Taxation (1989) 24 FCR 405; (1989) 20 ATR 403; (1989) 89 ATC 4192] the word usually connotes a position of defined authority in an organisation, such as a director of a company, or a tertiary education body. Their Honours held (at 4197 column 2) that it was not a word normally applicable to a relatively low-level employee, such as a university lecturer. As the court observed the applicant, like many holders of professional employment, is not made an office holder merely because her position has a name.

15. This view was consistently taken by the Boards of Review. For example, in Case K4, 78 ATC 29 [(1978) 22 CTBR (NS) 212], Mr Dempsey suggested that an office connotes something more than substantial, something more in the nature of a continuing executive position, the holder of which has distinct responsibilities. In Grealy's case itself, their Honours noted that the word "office" usually connoted a position of defined authority. [additional case citations added]

The Commissioners view on the meaning of serving on a committee, participating in the work, or performing a mission of an international organisation

The IOPI Act may exempt from tax the income of a person who is 'serving on a committee or is participating in the work or performing a mission' on behalf of an international organisation. The exemption is provided for in paragraph 2A of Part I of the Fifth Schedule to the IOPI Act.

Sub-regulation 11(1) of the UNPI regulations confers on individuals who perform a mission on behalf on the UN only those privileges and immunities specified in paragraphs 1, 2, 3, 4, 5 and 6 of Part I of the Fifth Schedule to the IOPI Act. However, these privileges do not include the exemption from tax specified in paragraph 2A of Part I of the Fifth Schedule of the IOPI Act

As noted in paragraph 36 of TR 2024/D2, the reference to the activities, 'serving on a committee', 'participating in the work of an international organisation', or 'performing a mission on behalf of an international organisation' are interpreted using their ordinary meaning.

The draft ruling further explains:

•                a person needs to be acting in an official capacity to be considered to be 'serving' on a committee of an international organisation. The committee would generally be an external-facing committee of the international organisation - that is, one that facilitates it to carry out its core work

•                a person participating in the work of an international organisation requires that person to undertake 'the work of the organisation'. This requires identifying what is 'the work of the organisation'. Whether or not the activity undertaken is properly characterised as 'the work of the organisation' will usually be identified by reference to the central object of that international organisation. For example, a person working for an international organisation whose mission is to prevent hunger and starvation would be participating in the work of the international organisation if they are working at a food aid distribution station set up by the organisation in a country where severe food shortages were occurring. It would not be satisfied merely because a person works for the international organisation. For example, a person who merely works in the administration of an international organisation is not as such participating in 'the work' of the organisation.

The Explanatory Statement to the Specialized Agencies (Privileges and Immunities) Amendment Regulations 2022 (Explanatory Statement) provides a definition of a 'temporary mission' for the purposes of the regulations:

A mission is considered 'temporary' if it exists only for a limited duration and is not permanent. Temporary missions could range from a small number of days up to longer periods. For example, a two-year mission with a nominated end date would be considered a 'temporary mission'. Where an individual undertakes more than one mission or assignment, each mission or assignment would be considered as a separate temporary mission.

A temporary mission can be undertaken by anyone engaged on a contractual basis by the relevant agencies, including experts, consultants, and other individuals.

We note that the explanatory statement regards a 'temporary mission' to be equivalent to an individual work assignment, with such defining characteristics as a limited duration and a nominated end date.

The case of Hamilton and the Commissioner of Taxation [2020] AATA 1812 (Hamilton) provides the defining example of a 'temporary mission' for the purposes of the regulations, the character of those engagements being the completion of a single specific task or assignment.

As explained in paragraph [37] of Hamilton, the predefined work output and completion date which defines a 'temporary mission' is in contrast to an ongoing employment position engaged in the ongoing discharge of a core function of an organisation. Our view is that this distinction remains valid whether or not that position has a contractual termination date.

It is necessary for the mission to be on behalf of the international organisation. Paragraph 39 of TR 2024/D2 provides that for a person to perform a mission on behalf of an international organisation requires the person doing that to represent the organisation to someone else. This connotes some interaction between the international organisation and someone else where the person acts on behalf of the organisation representing it in an official capacity, even if that is only temporarily.

Application to your circumstances

The income you have received is from an international organisation to which the IOPI Act applies.

Office holder

Under the prescribed organisation regulations, if you are an officer (other than high officer) of the prescribed organisation you will be entitled to the privileges and immunities specified in items 1 to 7 of Part I of the Fourth Schedule to the IOPI Act. This includes an exemption from taxation on salaries and emoluments received from the international organisation.

Your contract offer, terms and conditions define your position as a Regular Consultancy Contract. You replaced a staff member in this role as they were deployed to City E in a different job.

Your role includes:

•                being part of the project management team to erect a warehouse before the end of the calendar year

•                responsibility for the procurement of mobile storage units to various locations in Continent B

•                working with Organisation B and local governments

•                travel to run the project and provide onsite training

•                hours of work determined by the international organisation and you have no authority as to where the work is performed.

At the end of your engagement:

•                it is expected that cold storage warehouse will be built to house medicines

•                mobile storage units will be established for these medicines in various locations in Continent B

•                training education and onsite support will be on best practices of cold management and logistics, managing demand and supply alignment.

Reporting structure:

•                you report the Supply Chain Officer XX

•                you do not have any direct reports to you

•                you do not have the authority to engage any other person to perform the work apart from working collectively within the team.

Remuneration and costs:

•                you are paid monthly and are paid an allowance

•                the costs of your day to day role is paid by the organisation including travelling

•                your employer provided a computer and sim card

•                you purchased a mobile phone, to have better communication with other members of the organisation and make personal calls

•                you have not requested reimbursement for the mobile and usage charges and not compensated for these costs.

Location:

•                you are primarily stationed in City D

•                you have an office on the business premises of the Organisation B

•                you travel to various Continent B countries to run the project and provide onsite training.

Our view in TR 2024/D2 is an office holder can include a person who works as an employee of an international organisation. However, consultants (whether an employee or not) are excluded from being office holders.

Even if you are not a consultant, it is considered that your position as a Supply Chain Officer with Organisation A is not that of an office holder.

This is because:

•                the position is short term providing co-ordination, training and support until DD MM 20YY

•                your purpose is to achieve a specific result, building cold storage warehouse and mobile storage units in Continent B and delivering training

•                executive and managerial responsibilities are not central functions of your role as they would be for someone considered to be an office holder

•                the work doesn't include making recommendations to, or making significant decisions for the UN

•                the position does not have a sufficient level of authority in the organisation

•                you do not have any staff reporting to you

•                your duties and authority do not make it apparent why the relevant privileges and immunities would be conferred on the position.

Therefore, you are not an officer of Organisation A or the UN and the income you derive from Organisation A is not exempt from tax under section 6-20 of the ITAA 1997.

Serving on a committee, participating in the work, or performing a mission of an international organisation

As mentioned above, the IOPI Act may provide an exemption from taxation for a person who is serving on a committee, participating in the work, or performing a mission for an international organisation. However, the exemption is dependent on the exact provisions of the regulations of the individual organisation.

It is noted that the UNPI regulations do not provide any privileges and immunities for people 'participating in the work' of the UN.

Although item 2A of Part I of the Fifth Schedule of the IOPI Act provides an exemption from taxation for people performing a mission on behalf of an international organisation, the UNPI regulations only provide the privileges and immunities specified in paragraphs 1, 2, 3, 4, 5 and 6 of Part I of the Fifth Schedule to the Act which do not include an exemption from tax. Therefore, while we accept that you are performing a temporary mission on behalf of Organisation A which is an agency of the UN, this does not confer an exemption from taxation.

Therefore, the payments you receive from the Organisation A are not exempt from tax under section 6-20 of the ITAA 1997.

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