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Edited version of your private ruling
Authorisation Number: 1012545783000
Ruling
Subject: Tax Exempt Status
Question 1
Is the income of Entity U assessable income in terms of subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No. The income of the Entity U is not assessable income in terms of subsection 6-5(3) of the ITAA 1997.
Question 2
Is the income of Entity U assessable income in terms of subsection 6-10(5) of the ITAA 1997?
Answer
No. The income of Entity U is not assessable income in terms of subsection 6-10(5) of the ITAA 1997.
Question 3
Is a capital gain made by Entity U assessable pursuant to section 102-5 of the ITAA 1997?
Answer
No. Capital gains made by Entity U are not assessable pursuant to section 102-5 of the ITAA 1997.
Question 4
Are gains made by Entity U from financial arrangements assessable under subsection 230-15(1) of the ITAA 1997?
Answer
No. Gains made by Entity U from financial arrangements are not assessable under subsection 230-15(1) of the ITAA 1997.
Question 5
Are gains from the disposal or redemption by Entity U of traditional securities assessable in terms of sub section 26BB(2) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer:
No. Gains from the disposal or redemption by Entity U of traditional securities are not assessable in terms of subsection 26BB(2) of the ITAA 1936.
Question 6
Is the income of Entity U assessable income in terms of subsection 97(3) of the ITAA 1936?
Answer:
No. The income of Entity U is not assessable income in terms of subsection 97(3) of the ITAA 1936.
Question 7
Is interest, dividend or royalty income of Entity U liable to withholding tax pursuant to section 128B of the ITAA 1936?
Answer:
No. Interest, dividend or royalty income of Entity U is not liable to withholding tax pursuant to section 128B of the ITAA 1936?
Question 8
Is income of Entity U liable to withholding tax pursuant to section 840-805 of the ITAA 1997?
Answer:
No. Income of Entity U is not liable to withholding tax pursuant to section 840-805 of the ITAA 1997.
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
Entity U is established as an integral part of an International Organisation.
The rules and regulations that govern the operations of Entity U provide that the performance of Entity U's various functions are ultimately controlled by officials of the International Organisation.
The International Organisation is itself exempt from Australian tax by virtue of the International Organisations (Privileges and Immunities) Act 1963.
Entity U holds Australian assets.
Entity U does not hold any direct real property assets in Australia.
Entity U is not a resident of Australia for income tax purposes and does not have permanent establishment in Australia.
Relevant legislative provisions:
International Organisations (Privileges and Immunities) Act 1963
Income Tax Assessment Act 1997: subsection 6-5(3)
Income Tax Assessment Act 1997: subsection 6-10(5)
Income Tax Assessment Act 1997: section 102-5
Income Tax Assessment Act 1997: subsection 230-15(1)
Income Tax Assessment Act 1997: section 128B
Income Tax Assessment Act 1997: section 840-805
Income Tax Assessment Act 1936: subsection 26BB(2)
Income Tax Assessment Act 1997: subsection 97(3)
Reasons for Decision
The definition of the term 'international organisations' in subsection 3(1) of the International Organisations (Privileges and Immunities) Act 1963, states that an international organisation includes 'an organ of, or office within, an organisation.'
The privileges and immunities provisions are administered by the Department of Foreign Affairs and Trade: see paragraphs 2 and 20 of Taxation Ruling TR 92/14.
The Department of Foreign Affairs and Trade has advised that the Entity U is part of the International Organisation, is therefore eligible for the privileges and immunities conferred with the International Organisation, and is consequently exempt from Australian income tax and withholding tax by virtue of the International Organisations (Privileges and Immunities) Act 1963.
Separately, an analysis of the rules and regulations under which Entity U is established leads to the conclusion that Entity U is an 'organ' of the International Organisation.
Accordingly, it is considered that for the purposes of subsection 3(1) of the International Organisations (Privileges and Immunities) Act 1963, Entity U is an 'organ' of the International Organisation. Consequently, Entity U is entitled to the benefits and privileges conferred on the International Organisation so that it is exempt from Australian income tax and withholding tax by virtue of the International Organisations (Privileges and Immunities) Act 1963.