Edited version of private ruling

Authorisation Number: 1011702530437

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Ruling

Subject: Foreign employment income - international organisation

Question

Is your foreign employment income derived from service with an international organisation exempt from income tax in Australia?

Answer

Yes

This ruling applies for the following periods

Year ending 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts and circumstances

You are an Australian resident for taxation purposes.

You are employed by an international organisation.

You are based in Country X.

Your original contract was for 18 months but has been renewed on several occasions.

You are a staff member of the international organisation.

You are paid by the organisation and your income consists of salary and allowances.

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 6-20(1).

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.

Subsection 6-20(1) of the ITAA 1997 provides that an amount of ordinary income is exempt income if it is made exempt 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 discusses taxation privileges and immunities of prescribed international organisations and their staff.

Regulations were made under the IO(P&I)A relating to your employer, an international organisation. Your employer is an international organisation to which IO(P&I)A applies. Your employer is a body established by the international organisation.

A subregulation of the regulations confers on officers (other than high officers) of the international organisation the privileges and immunities specified in Part 1 of the Fourth Schedule of the IO(P&I)A.

Paragraph 2 of Part 1 of the Fourth Schedule of the IO(P&I)A provides for an exemption from taxation on salaries and emoluments received from an international organisation by an officer (other than high officer) of the organisation (paragraph 9 of TR 92/14).

Taxation Determination TD 92/153 provides that the phrase 'person who holds an office' in relation to a prescribed international organisation includes those people who work as employees for that organisation.

In your case, you are employed as a staff member by the international organisation based in Country X.

As an employee of the organisation, paragraph 2 of Part 1 of the Fourth Schedule of the IO(P&I)A provides that the income you derive from service with the organisation is exempt from income tax in Australia.

Accordingly, the income you derive from service with the international organisation is exempt income under subsection 6-20(1) of the ITAA 1997, and is therefore not assessable in Australia under subsection 6-5(2) of the ITAA 1997.