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Edited version of your written advice
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Ruling
Subject: International Organisations
Question and Answer
Is employment income you receive under a contract included in your assessable income?
No
This ruling applies for the following period
Period ended 18 August 2015
The scheme commenced on
1 July 2015
Relevant facts
You are an Australia resident for income tax purposes.
You are seconded under a contract to an International Organisation.
Your duties required that you perform your services in an overseas location.
Your contract for service will cease during the financial year ended 30 June 2016.
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
XYZ (Privileges and Immunities) Regulations 1986
Regulation 10
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.
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 with international organisations
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 XYZ (Privileges and Immunities) Regulations 1986 provides that a person who is a member of staff 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 service to XYZ are exempt from income tax under section 6-20 of the ITAA 1997.