Edited version of private advice

Authorisation Number: 1052387790183

Date of advice: 23 April 2025

Ruling

Subject:

International income - IOPI Act

Question 1

Does subparagraph 6(1)(d)(i) of the International Organisations (Privileges and Immunities) Act 1963 (IOPI Act) 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 you are working in Australia?

Answer 1

No

Question 2

Does subparagraph 6(1)(e)(i) of the IOPI Act apply to exempt you from tax in Australia under section 6-20 of the ITAA 1997, for the remuneration you derived from the Organisation whilst you are working in Australia?

Answer 2

No

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

XX XXXX 20XX

Relevant facts and circumstances

You are an Australian resident for tax purposes.

You are an Australian citizen.

Since XX XXXX 20XX, you have been engaged to work for an international organisation (the Organisation) on a number of short contracts of less than six months in duration.

The terms of reference for each of these contracts were provided with respect to the private ruling application and form part of, and are to be read with, the description of the facts and circumstances set out below:

You performed different pieces of work with varying specific roles and responsibilities over the different contracts. The primary position descriptions ranged from project and activity management through to analytical research tasks, reporting and literature production. While the specific work outputs did vary between contracts, all engagements were contracted by the same administrative centre of the Organisation to perform different pieces of work in their climate change research branch.

The following terms and characteristics of your engagements were equivalent across all of your contracts with the Organisation:

You completed all of your contracts for the Organisation working remotely from within Australia.

You support coordination of project activities amongst team members, there is no one below you in the official reporting line.

You do not have the authority to engage any others to perform any part of the work in the position.

The contracts under which you were engaged by the Organisation were developed at the time to support developing projects into the future. The contracts were not engaging you to fill vacancies in established positions within the organisation to ensure their continuous operation.

Your contracts do not impose the ongoing discharge of specific duties in relation to the Organisation beyond the scope of the projects you were assigned.

The consultancy contracts are renewable and extendable up to the Organisation's maximum duration, after which they impose a mandatory break period.

You did not receive leave entitlements or other benefits, apart from medical insurance, which was taken from your earnings.

Your work hours are expected to occur within regular office hours per Organisation's regulations, with flexibility afforded to accommodate personal schedules as necessary.

While employed by the Organisation you can accept external engagements subject to approval to avoid conflicts of interest per the Organisation's regulations.

While you are under contract, you are required to rectify and address any issues or defects in work you perform. Outside of your contracted period, there is no obligation to address defective work previously executed.

You supply your own devices to undertake the work for the Organisation.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

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

Income Tax Assessment Act 1997 section 6-20

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

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

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

International Organisations (Privileges and Immunities) Act 1963 Part 1 of the Fourth Schedule

International Organisations (Privileges and Immunities) Act 1963 Part 1 of the Fifth Schedule

Specialized Agencies (Privileges and Immunities) Regulations 1986

Reasons for decision

Summary

You have not met the requirements for your income to be exempt under the International Organisations (Privileges and Immunities) Act 1963 (IOPI Act).

Detailed reasoning

Assessable income

Section 6-5 of the Income Tax Assessment Act 1997 (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 International Organisations (Privileges and Immunities) Act 1963 (IOPI Act).

Exemption of income under the IOPI Act 1963

One of the privileges afforded under the IOPI Act is an exemption from taxation on income earned from a designated 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 an 'international organisation to which this Act applies' as 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.

Under section X of the Regulations, the Organisation is an organisation to which the IOPI Act applies.

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 an exemption from taxation on salaries and emoluments received from the international organisation for: 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 item 2 of Part I of the Fourth Schedule to the IOPI Act; and a person who is 'serving on a committee or is participating in the work or performing a mission' under paragraph 6(1)(e)(i) and item 2A of Part I of the Fifth Schedule to the IOPI Act.

Subregulation X(x) of the Regulations states a person who holds an office, other than a person who holds, or is performing the duties of, an office specified in Column X of an item in the Schedule, has the privileges and immunities specified in Part I of the Fourth Schedule to the IOPI Act

Subregulation X(x) of the Regulations states a person who is serving on a committee to which this subregulation applies or is performing, whether alone or jointly with other persons, a mission has the privileges and immunities specified in paragraphs 1, 2, 3, 4, 5 and 6 of Part I of the Fifth Schedule to the IOPI Act.

The Commissioner's view on the meaning of office holder

The terms 'office' and 'office holder' are not defined by the IOPI Act or the ITAA 1997 and therefore, they take their ordinary meaning.

The Commissioner's view on the meaning of office holder is set out in draft Taxation Ruling TR 2024/D2 Income tax: exempt income of international organisations and persons connected with them. Paragraph 29 of TR 2024/D2 states that a holder of an office may include a person who works as an employee of an international organisation, but it 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.

Paragraph 27 of TR 2024/D2, shows the four positive and negative criteria in considering if someone is an office holder. This is a question of fact, considered on a case-by-case basis. The criteria outlined in paragraph 27 are:

•                     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 32 of TR 2024/D2 provides an example of a person who is an office holder:

32. 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

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 discussed in paragraphs [31] and [34] of Jayasinghe [2017] HCA 256 (Jayasinghe case), 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 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. As per paragraph [38] of the Jayasinghe case, 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).

The High Court also affirmed the Commissioner's view outlined in paragraph 29 of TR 2024/D2 in paragraph [52] of the Jayasinghe case, where it was stated:

... a person who works as an employee for a relevant international organisation will not be a "person who holds an office" if that person is also either locally engaged by the organisation and paid at an hourly rate or engaged by the organisation as an expert or a consultant...

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]

AAT Case 12,178 (1997) 97 ATC 407; (1997) 37 ATR 1174 concerned a taxpayer who received a payment in respect of unused sick leave when he resigned from his position as a Branch Manager after having successfully won a position of Division Director for the same employer (a local council). In determining the case, one of the issues raised was whether the taxpayer was the holder of an office and whether a retirement or termination had occurred. In that case, Senior Member J Block stated:

The test as to whether a position is an office will no doubt usually be one involving questions of fact and degree...

In his findings, Senior Member Block also referred to a few previous cases which looked at the issue of office and at (ATC) 421; (ATR) 1189, he made the following observation:

In Great Western Railway Co v. Bater [1920] 3 KB 266 Rowlett J had held that an office was "a subsisting, permanent, substantive position which had an existence independent of the person who filled it, which went on and was filled in succession by successive holders".

I consider, with respect, that the meaning attributed to the term "office" by Deputy President Thompson in W31 [Case No VT 87/3438 (1989) 20 ATR 3509; (1989) 89 ATC 307] is for Australian purposes, correct. That test would require that it is a position to which "duties are attached, especially a place of trust, authority or service under constituted authority". It is thus clear that the restricted UK view is narrow, when contrasted with the less restricted Australian approach. [additional case citations added]

Refer also to Hamilton v Commissioner of Taxation [2020] AATA 1812 (Hamilton case) where the taxpayer was found not to be an office holder of the International Monetary Fund in relation to work he undertook for that organisation. In that case the taxpayer was not engaged in the ongoing discharge of a core function of the IMF. Significantly, the appointments under which he did work did not exist in the organisational structure of the IMF, in the sense that his duties were limited to the performance of specific tasks, and the positions for which he was engaged did not exist independently of his appointment to the relevant assignments.

Question 1 - application to your circumstances

The income you have received is from an international organisation to which the IOPI Act applies. Under the regulations, if you are an officer (other than high officer) of the Organisation you will be entitled to the privileges and immunities specified Part I of the Fourth Schedule of the IOPI Act. This includes an exemption from taxation on salaries and emoluments received from the international organisation.

We have evaluated each of your contracts' roles and responsibilities against the Commissioner's determinative criteria for an office holder listed under paragraph 27 of TR 2024/3. As the relevant characteristics were the same across all contracts, the following applies to all five contracts equally.

For the four positive criteria:

1) a position which has an ongoing existence within the organisation and has certain duties attached to it regardless of the individual occupying the position from time to time:

-  Your contracts were developed at the time to support developing projects into the future; they were not pre-existing positions to which specific ongoing duties attach in relation to the Organisation which will continue to be filled by other individuals after you in the same capacity and manner as your engagements.

2) identifiable duties, functions and responsibilities or powers which enable the performance of the organisation's functions:

-  You work as a consultant with responsibilities and accountabilities which are stated in your post descriptions. Your duties under each of the five contracts are limited to the execution of project-specific tasks and do not task you with any responsibility for ensuring the performance of the Organisation's functions is upheld.

3) a level of authority with respect to the organisation

-  You do not have an obligation to rectify and address any issues or defects in work you perform outside of your contracted periods.

-  You do not have the authority to engage any others to perform any part of the work in the position.

-  You have no staff reporting to you in a management/supervisory capacity, nor are you required to provide formal leadership or training of junior staff on behalf of the organisation.

4) 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

-  The contracts under which you have been engaged by the Organisation do not confer upon you the authority to make executive decisions on behalf of the Organisation which would illustrate the justification for the privileges and immunities to be conferred.

For the two negative criteria:

>  the position places the person outside the organisational structure

-  You are engaged by the climate change research branch of one of the Organisation's administrative centres to performing project-specific, short-term pieces of work as a consultant.

-  The organisation does not require the ongoing discharge of your duties to maintain its core operations, such as administrative or management obligations, therefore; under the same reasoning as the Hamilton case, your positions operated outside the organisational structure of the Organisation.

>  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.

-  You work as a consultant with no broader responsibilities than those stated in your post descriptions. You do not have employees of the Organisation who report to you, nor do you have the authority to make financial, staffing, or other decisions which affect the Organisation beyond the scope of the completion of your contracted duties. As such, we do not regard the roles you have held as having duties, functions and responsibilities or power that would be regarded as holding an office.

Additionally, under paragraph 29 of TR 2024/D2 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 a consultant. You are employed by the Organisation as a consultant. You do not have an obligation to rectify and address any issues or defects in work you perform outside of your contracted periods.

Based on the factors set out above, we have determined that you are not an officer (other than high officer) of the Organisation. Therefore, the salary you received in relation to your engagement with the Organisation will not be exempt from taxation under section 6(1)(d) of the IOPI Act.

Question 2 - application to your circumstances

The Regulations do not provide the exemption from taxation on salaries and emoluments for a person who is serving on a committee or is participating in the work or performing a mission for the Organisation which is afforded under item 2A of Part I of the Fifth Schedule to the IOPI Act.

Therefore, the salary you received in relation to your engagement with the Organisation will not be exempt from taxation under paragraph 6(1)(e) of the IOPI Act, and income you earn from the Organisation will be included in your assessable income.

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