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Edited version of private ruling
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Ruling
Subject: Foreign income
Question and answer:
Is the income derived by you as a consultant to an International Organisation for the provision of services, carried out partly in Australia and partly outside Australia, assessable income?
Yes.
This ruling applies for the following periods:
Year ending 30 June 2011
The scheme commenced on:
1 July 2010
Relevant facts and circumstances
You are an Australian resident for tax purposes.
You have taken up an appointment as a short term consultant with an International Organisation.
You are sometimes required to travel overseas.
The income you receive is paid directly into your Australian bank account.
The International Organisation does not withhold tax from the payments it makes to you.
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 Section 6-20.
Income Tax Assessment Act 1936 Section 23AG.
International Organisation (Privileges and Immunities) Act 1963.
Specialized Agencies (Privileges and Immunities) Regulations 1986.
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.
Income from professional services is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.
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 & 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.
Subparagraph 6(1)(e)(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 I of the Fifth Schedule of the IO(P&I)A upon a person who serves on a committee, or, participates in the work of, or, performs a mission on behalf of, an international organisation to which this Act applies.
The International Organisation in your case is listed in the Schedule to the Specialised Agencies (Privileges & Immunities) Regulations 1986 (SA(P&I) Regs). The SA(P&I) Regs are made under section 6 the IO(P&I)A.
Regulation 9 of the SA(P&I) Regs does not provide any income tax exemption for persons serving on a committee or performing a mission (such as independent consultants) for the International Organisation in your case.
In your case you received income as a result of a contract with an International Organisation to provide consultancy services. You are not an employee of this International Organisation.
Therefore, the income you received as a consultant from the International Organisation for the provision of services carried out in Australia and overseas, is assessable under subsection 6-5(2) of the ITAA 1997.