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Edited version of your written advice
Authorisation Number: 1013043752519
NOTICE
This edited version has been found to be misleading or incorrect. It does not represent the ATO’s view of the relevant law.
This notice must not be taken to imply anything about:
● the binding nature of the private advice issued to the applicant
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Edited versions cannot be relied upon as precedent or used for determining how the ATO will apply the law in other cases.
Date of advice: 5 July 2016
Ruling
Subject: Assessability of foreign income
Question and answer
Is the income you derive from the international organisation assessable in Australia?
No.
This ruling applies for the following periods:
Year ended 30 June 2016
Year ending 30 June 2017
The scheme commences on:
1 July 2015
Relevant facts and circumstances
You are a resident of Australia for taxation purposes.
You entered into a contract to carry out duties as a consultant for Organisation X.
You are based in a foreign country for the period of the consultancy contract.
You have provided correspondence from Organisation X which states that you are an 'official' of the organisation for the purposes of Article VI of the Convention on the Privileges and Immunities of the Specialized Agencies1948.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5(2)
Income Tax Assessment Act 1997 subsection 6-15(2)
Income Tax Assessment Act 1997 section 6-20
International Organisations (Privileges and Immunities) Act 1963 Subsection 5(1)
International Organisations (Privileges and Immunities) Act 1963 Part 1 of the Fourth Schedule
Specialized Agencies (Privileges and Immunities) Regulations 1986 Regulation 3
Specialized Agencies (Privileges and Immunities) Regulations 1986 Subregulation 8(1)
Reasons for decision
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident includes ordinary income derived from all sources, whether in or out of Australia, during the income year.
Income from the provision of 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 income tax.
Part 1 of the Fourth Schedule to the IO(P&I)A provides that a person who holds an office (other than a high office) in an international organisation will be exempt from taxation on salaries and emoluments received from the organisation.
Subsection 5(1) of the IO(P&I)A states that the regulations may declare an organisation to be an organisation to which the IO(P&I)A applies. The Schedule to the Specialized Agencies (Privileges & Immunities) Regulations 1986 (SA(P&I) Regulations) lists Organisation X as a specialized agency.
Regulation 3 of the SA(P&I) Regulations states that each specialized agency is an international organisation to which the IO(P&I)A applies, therefore Organisation X is an international organisation to which the IO(P&I)A applies.
Under subregulation 8(1) of the SA(P&I) Regulations, a person who holds an office (other than a high office) in a specialized agency has the privileges and immunities specified in Part 1 of the Fourth Schedule to the IO(P&I)A, including an income tax exemption on salaries and emoluments received from the organisation.
Article VI, Section 19(b) of the Convention on the Privileges and Immunities of the Specialized Agencies1948 (the Convention) provides that 'officials' of a specialized agency (such as Organisation X) will enjoy the same exemptions from taxation in respect of salaries and emoluments paid to them by the specialized agency and on the same conditions as are enjoyed by officials (office holders) of Organisation Y.
In your case, you have provided correspondence from Organisation X that states that your status with Organisation X is that of an official for the purposes of Article VI of the Convention.
Therefore, you are entitled to the privileges and immunities specified in Part 1 of the Fourth Schedule to the IO(P&I)A as you hold an office in a specialized agency.
Accordingly, the income derived by you as an official of Organisation X is not assessable in Australia.