Edited version of private ruling

Authorisation Number: 1011712400499

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Ruling

Subject: Income - international organisation

Question

Is your income earned as a contractor to an international organisation exempt from income tax in Australia?

Answer

No

This ruling applies for the following periods

Year ending 30 June 2009

Year ending 30 June 2010

The scheme commenced on

1 July 2008

Relevant facts and circumstances

You are an Australian resident for taxation purposes.

You work as a translator.

In the 2008-09 and 2009-10 income years, you did several contract jobs in Australia for two bodies of an international organisation.

The international organisation did not withhold tax from the income.

You included the income in your income tax returns for the above years.

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 relating to the international organisation you worked for were made under the IO(P&I)A.

A subregulation of these 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 the international organisation by an officer (other than high officer) of the organisation (paragraph 9 of TR 92/14).

Taxation Determination TD 92/153 provides information as to who is a 'person who holds an office'. The determination states that the Department of Foreign Affairs and Trade (DFAT), who administers the IO(P&I)A and regulations, considers that the phrase 'person who holds an office' covers those people who work as employees of the organisation.

DFAT does not accept, however, that the phrase includes either persons who are locally engaged by the organisation and paid at an hourly rate, or persons engaged by the organisation as experts or consultants

In your case, you were engaged as a contractor on a number of jobs to bodies of the international organisation.

As you were a contractor, you are not considered an employee of the organisation and a 'person who holds an office'. This means that the exemption from taxation provided by the subregulation does not extend to the income you derived from your contracts with the bodies of the international organisation.

Consequently, the income you derived from the contracts is not exempt from income tax in Australia under the IO(P&I)A, and is therefore assessable in Australia under subsection 6-5(2) of the ITAA 1997.