| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1012818684707
Ruling
Subject: Income Tax
Question
Is the income you received from the International Organisation for the consultancy job performed in a foreign country exempt from income tax in Australia?
Answer
Yes
This ruling applies for the following periods:
Year ending 30 June 2015
The scheme commences on:
1 July 2014
Relevant facts and circumstances
You are a resident of Australia for taxation purposes.
You signed a contract with the International Organisation to provide consulting services.
The work was performed entirely in a foreign country.
You are expecting to be completing a similar consultancy engagement for the International Organisation in the future.
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
International Organisation (Privileges and Immunities) Act 1963
International Organisation (Privileges and Immunities) Regulations 1967
Subregulation 7(1), Subregulation 7(2)
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian taxation resident will include ordinary income derived from all sources, whether in or out of Australia, during the income year.
Income from consultancy 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 Organisation (Privileges and 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. The International Organisation for which you are working is an International Organisation prescribed under the IO(P+I)A.
Taxation Ruling TR 92/14 Income tax: taxation privileges and immunities of prescribed International Organisations and their staff (TR 92/14) describes the operation of privileges and immunities relating to taxation that apply to International Organisations and persons working for these organisations.
TR 92/14 provides that tax exemptions may be available to a Holder of a High Office, Representative, Holder of an Office, or expert or consultant. However, an exemption from taxation is not extended to Australian residents who are engaged by the International Organisation and the services are rendered in Australia.
In your case, you are a resident of Australia for taxation purposes; you signed a contract with the International Organisation to provide consulting services. The work was performed entirely in a foreign country. As a result, the income you received from the International Organisation is exempt from income tax in Australia.
Further issues for you to consider
You state that you are expecting to be completing a similar consultancy engagement for the International Organisation before the end of 2015 financial year. There is a possibility that you will be engaged in similar consultancy engagements in the future.
The payment you receive for work performed for the International Organisation in Australia is not exempt from income tax under sub-regulation 7(2) of the International Organisation (Privileges and Immunities) Regulations 1967 (the Regulations) as you are a resident of Australia and receive payment for work rendered in Australia. Accordingly the payment is assessable under subsection 6-5(2) of the ITAA 1997.
The payment you receive for work performed for the International Organisation in overseas countries is exempt from income tax under sub-regulation 7(1) of the Regulations as the payment is received while performing services for the International Organisation overseas. Accordingly the payment is not assessable under subsection 6-5(2) of the ITAA 1997 as the payment is exempt under section 6-20 of the ITAA 1997.