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Edited version of your written advice
Authorisation Number: 1013008952360
Date of advice: 11 May 2016
Ruling
Subject: Foreign income
Question and answer
Is the income you will derive from your service with the Organisation exempt from tax in Australia?
No
This ruling applies for the following period
Year ending 30 June 2017
Year ending 30 June 2016
The scheme commenced on
1 July 2015
Relevant facts
You are an Australian resident for taxation purposes.
You are being engaged by the Organisation in country A, as a consultant.
The Organisation is part of the United Nations (UN) Organisation, an international organisation with certain privileges and immunities including an exemption from tax.
You are engaged on a # day contract.
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
Reasons for decision
Income from professional 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 says 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 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.
Subsection 5(1) of the IO(P&I)A provides that the Specialised Agencies (Privileges & Immunities) Regulations 1986 (SA(P&I) Regs) may declare an organisation to be an organisation to which the IO(P&I)A applies.
Subsection 3(1) of the IO(P&I)A defines the term 'international organisation to which this Act applies' to mean an organisation that is declared by the regulations to be an international organisation to which the IO(P&I)A applies, and includes a body established by such an organisation.
Regulation 3 of the SA(P&I) Regs says that each Specialized Agency is an international organisation to which the IO(P&I)A applies, therefore the Organisation is an international organisation to which the IO(P&I)A applies.
Entitlement to exemption under the IO(P&I)A depends on whether you were engaged as an independent consultant or as a person who held an office in the Organisation.
You have confirmed that you are engaged as a short term consultant.
Under subregulation 8(1) of the SA(P&I) Regs a person who holds an office, other than a high office, in a Specialized Agency such as the #, has the privileges and immunities specified in Part I of the Fourth Schedule to the IO(P&I)A, including income tax exemption on salaries and emoluments received from the organisation. You are not entitled to the privileges and immunities specified in Part 1 of the Fourth Schedule to the IO(P&I)A as you do not hold an office in the Organisation.
Regulation 9 of the SA(P&I) Regs applies to the taxpayer's engagement as a consultant and they are entitled to the privileges and immunities specified in paragraphs 1, 2, 3, 4, 5 and 6 of Part 1 of the Fifth Schedule to the IO(P&I)A, however, income tax exemption is not available for persons serving on a committee or performing a mission (such as independent consultants) for the Organisation
Accordingly, the income derived by an Australian resident taxpayer as a consultant to the Organisation in country A is assessable under subsection 6-5(2) of the ITAA 1997.