Edited version of private advice

Authorisation Number: 1051708599189

Date of advice: 30 June 2020

Ruling

Subject: Foreign income

Question

Is your foreign income exempt from tax in Australia under the International Organisations Privileges and Immunities Act?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a resident of Australia for taxation purposes.

You worked for two overseas organisations.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Section 6-20

International Organisations (Privileges and Immunities) Act 1963

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.

The IO(P&I)A exempts from taxation certain income of a person connected with an international organisation, to the extent that it satisfies all of these elements:

·         the income is received from an international organisation to which the IOPIA 1963 applies

·         the person is connected with the international organisation in one of the ways set out subsection 6(1) of the IO(P&I)A

and

·         the conditions and other particulars provided in the regulations for the international organisation are satisfied in relation to the income of the person.

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.

Subsection 6(1) and Part I of the Second to the Fifth Schedules to the IOPIA 1963 inclusive set out the taxation exemptions that can be conferred upon certain persons currently connected with an international organisation.

Both the organisations you work for overseas are not international organisations which the IOPA Act applies.

As there have been no regulations made that state that either of the organisations you work for are international organisations for the purposes of the IOPA Act.

Therefore, the income you derived while working for these organisations is not exempt in Australia.

As a resident of Australia for taxation purposes you are taxed on your world-wide income.

You will be entitled to a Foreign Income Tax Offset for the local tax paid on your income in Country Y.