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Edited version of your private ruling
Authorisation Number: 1012459150559
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This edited version has been found to be misleading or incorrect. It does not represent the ATO’s view of the relevant law.
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● the binding nature of the private advice issued to the applicant
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Ruling
Subject: Exemption of foreign income
Question and answer:
Is the income you receive from the international organisation you work for assessable in Australia?
No.
This ruling applies for the following periods:
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015.
The scheme commenced on
1 July 2012.
Relevant facts
You are an official of an international organisation.
You are working for the international organisation on a project on a fixed term international appointment.
You will not be living in Australia for the next couple of years while you are working for the international organisation in country A.
You are working as a specialist in country A.
While you are working in country A you will earn income in Australia from interest paid on bank accounts and a superannuation pension.
You are not liable to pay any taxes in country A.
There is no tax treaty between Australia and country A.
There is a tax system in place in country A.
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 Subsection 6-20(1).
International Organizations (Privileges and Immunities) Act 1963 paragraph 2 part 1 schedule 4.
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 your salary and wages 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.
Subsection 5(1) of the IO(P&I)A provides that the regulations may declare an organisation to be an organisation to which this Act applies.
Paragraph 3(1)(b) of the IO(P&I)A defines the term an 'international organisation to which this Act applies' to mean an organisation that is declared by the regulations to be an international organisation to which this Act applies, and includes a body established by such an organisation.
The main international organisation is an international organisation listed in the regulations of the IO(P&I)A and the international organisation you work for is an organ of the main organisation. Therefore, the international organisation you work for is an international organisation to which IO(P&I)A applies.
Subparagraph 6(1)(d)(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 Fourth Schedule upon a person who holds an office in an international organisation to which this Act applies, not being an office prescribed by the relevant regulations as a high office.
In your case, the relevant international organisation is the one you work for. You will be an official with the international organisation working as a specialist in country A.
Paragraph 2 of Part I of the Fourth Schedule to the IO(P&I)A provides an exemption from taxation on salary and emoluments received from the international organisation.
As you are a official of an international organisation to which the IO(P&I)A applies, the income received by you from working for the international organisation is exempt from Australian tax in accordance with the IO(P&I)A and the relevant regulations made under that Act that relate to the organisation.
Accordingly, as the income is exempt under section 6-20 of the ITAA 1997 it is not assessable under subsection 6-5(2) of the ITAA 1997.