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Edited version of your written advice
Authorisation Number: 1051249859751
Date of advice: 12 July 2017
Ruling
Subject: Assessability of annual emoluments
Are your annual emoluments (fee, location adjustment allowance, gratuity and provisional housing allowance) as paid to you by an International Organisation for your work in Country X, exempt from taxation in Australia according to the privileges and immunities offered to it and you, or any other reason?
Answer:
Yes.
This ruling applies for the following periods:
Year ended 30 June 2017
Year ended 30 June 2018
The scheme commences on:
1 July 2016
Relevant facts and circumstances
You are an Australian citizen.
You accompanied your spouse to Country X as they were working on an Australian Government volunteer project. You have resided in Country X since.
You had applied for this position however it was only offered to you recently. You are now employed by the International Organisation for a period of XX months.
There is provision for an extension and you would be interested in extending however the decision will not be entirely yours.
You are renting a home in Country X however you own a home in Australia.
You and your spouse resigned from the Commonwealth Public Service more than 10 years ago. You both have preserved PSS contributions however you are no longer contributing members.
Your spouse and XX children are living with you in Country X.
You consider yourself to be more an employee than a consultant as annual and sick leave are provided.
You are working for the Ministry and being paid by an International Organisation.
Among other things, your employment agreement states:
● Your location and where you are posted.
● The duration of your assignment.
● Who you are responsible to.
● Your duties.
● Your date of commencement.
● Privileges and Immunities
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5(2)
Income Tax Assessment Act 1997 Section 6-15(2)
Income Tax Assessment Act 1997 Section 6-20
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident will include ordinary income derived from all sources, whether in or out of Australia, during the income year.
However, subsection 6-15(2) of the ITAA provides that if an amount is exempt income then it is not assessable income.
Section 6-20 of the Income Tax Assessment Act 1997 (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.
Subparagraph 6(1)(e)(i) of the IO(P&I)A provides that the Regulations may confer any or all of the privileges and immunities set out in Part I of the Fifth Schedule upon a person who is serving on a committee of, or participating in the work of, or performing a mission on behalf of, an international organisation.
Regulations relating to the International Organisation have been made under the IO(P&I)A.
Those Regulations provide that a person who is serving on a committee, or is participating in the work, of the International Organisation, or is performing, whether alone or jointly with other persons, a mission on behalf of that organisation, has all the privileges and immunities specified in Part I of the Fifth Schedule to the IO(P&I)A.
Paragraph 2A of Part I of the Fifth Schedule to the IO(P&I)A provides an exemption from taxation on salary and emoluments received from the organisation.
Consequently, as you will be performing work for, and participating in the work of the International Organisation, the income you will receive from the International Organisation is exempt from Australian tax in accordance with the IO(P&I)A and the Regulations relating to that organisation made under that Act.