Edited version of your private ruling

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Ruling

Subject: Income amounts paid under immunity by a Specialized Agency.

Question:

Is the income you receive from overseas employment under a contract with an International Organization to be included in your assessable income?

Answer:

No

This ruling applies for the following period

Period ended 30 June 2012

The scheme commenced on

1 July 2010

Relevant facts and circumstances

You are an Australia resident for income tax purposes.

You were employed as an Officer by a Specialized Agency

Your duties required that you perform your services in an overseas location.

You were paid an emolument for your services rendered in accordance with a contract entitled "Special Service Agreement".

Relevant legislative provisions

Income Tax Assessment Act 1997

Subsection 6-5(2)

Subsection 6-15(2)

Section 6-20

International Organisations (Privileges and Immunities) Act 1963

Paragraph 6(1)(d)

Fourth Schedule

Specialized Agencies (Privileges and Immunities) Regulations 1986

Regulation 2

Regulation 8

Schedule

Reasons for decision

Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.

An emolument 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.

Employment in international organisations (Specialized Agencies)

Under its domestic law Australia declares its right to impose income tax generally on the world-wide income of Australian residents (as defined in the ITAA) and on the Australian source income of non-residents. Departure from these principles, in the form of privileges and immunities, are contained in specific provisions of Australia's domestic law.

The International Organisations (Privileges & Immunities) Act 1963 (the 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.

Paragraph 6(1)(d) of the IO(P+I)A provides that the Regulations may confer any or all of the privileges and immunities set out in the schedules to the Act.

The Specialized Agencies (Privileges and Immunities) Regulations 1986 have been made under the IO(P&I)A. To specify which International Organisations the immunities apply to. Regulation 2 defines a Specialized Agency.

Individuals employed by Specialized Agencies

Regulation 8(1) of the Specialized Agencies (Privileges and Immunities) Regulations 1986 provides that subject to regulation 8(2), a person who holds an office in a Specialized Agency has the privileges and immunities specified in Part I of the Fourth Schedule to the IO(P+I) A.

Item 2 of Part I of the Fourth Schedule prescribes the following privilege and immunity of your office in the Specialized Agency:

Exemption from taxation on salaries and emoluments received from the organisation.

Therefore, payments you have received in connection with your Special Service Agreement are exempt from income tax under section 6-20 of the ITAA 1997.

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