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Edited version of private advice
Authorisation Number: 1051638275272
Date of advice: 26 March 2020
Ruling
Subject: International organisation exempt income
Question
Is the salary received from the International Organisation (IO) as a Delegate exempt from tax in Australia under section 6-20 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 2019
Year ending 30 June 2020
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You are a resident of Australia for taxation purposes.
You accepted an offer of employment with the IO in a special position.
You have provided us with a copy of contract which sets out the terms and conditions of your posting.
You are currently living and working in foreign country A.
You will not perform any of your duties under the contract in Australia.
You have one individual who reports to you.
You cannot engage other people to perform any parts of the work.
You are on an open-ended employment contract with the IO. The contract may be terminated at any time by either party.
You have leave entitlements and other similar benefits associated with your employment with the IO.
Your hours of work are determined based on local conditions and operational circumstances.
Your salary with the IO is on a monthly basis.
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 Subsection 6-20(1)
International Organisations (Privileges and Immunities) Act 1963
Reasons for decision
Subsection 6-5(2) of the 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 1997 provides that if an amount is exempt income then it is not assessable.
Subsection 6-20(1) of the ITAA 1997 provides that an amount of ordinary income is exempt income if it is made exempt by a provision of the ITAA 1997 or the Income Tax Assessment Act 1936 (ITAA1936)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.
Section XD of the IO(P&I)A provides privileges and immunities in respect of the IO. Subsection XD(1) states that regulations may confer upon the IO and persons of a kind referred to in the specified IO arrangement such privileges and immunities as are required to give effect to the Arrangement.
The relevant regulation gives an exemption from income tax for people working outside Australia in a special position,
You are exempt from taxation on your IO salary in Australia as you work for the IO outside Australia in your capacity as holding a special position.