Edited version of private advice

Authorisation Number: 1052382065152

Date of advice: 7 April 2025

Ruling

Subject: International organisation - assessable income

Question

Is the remuneration you received from the International Organisation (Organisation) exempt from income tax in Australia under section 6-20 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a resident of Australia for taxation purposes.

You are engaged as an 'Individual Contractor' with the Organisation as a Senior Policy Advisor.

You are engaged for a number of days spread over several months.

You are currently in the process of having your contract extended.

The Terms of Reference for the position state that Consultant(s) will provide strategic, technical, and policy advisory support to the Organisation and its partners. The experts will focus on key aspects, offering tailored support based on their specific areas of expertise. The scope of work includes:

A. Institutional Design, Strategic Governance, and Digital Economy

•                    Provide strategic guidance on establishing or refining digital governance frameworks that promote coordination, inclusivity, and accountability, while proactively exploring emerging technologies and fostering the growth of the digital economy.

•                    Advise on policies and institutional models to drive innovation, entrepreneurship, and inclusive participation in the digital economy. Address systemic barriers such as limited market access, regulatory challenges, and gaps in digital financial inclusion. Support whole-of-government adoption of digital transformation agendas to bridge the digital divide and identify fit-for-purpose mechanisms for effective implementation.

•                    Support governments in integrating digital economy strategies into national development plans, ensuring alignment with SDG priorities and leveraging opportunities for job creation, private sector engagement, and trade facilitation.

B. Policy, Technology, and Innovation Advisory

•                    Provide policy recommendations to address systemic barriers to digital transformation, including regulatory constraints, funding mechanisms, institutional overlaps, and digital infrastructure gaps.

•                    Support the identification and prioritization of sectoral Digital Public Infrastructure (DPI) solutions, such as digital IDs, interoperable payment systems, and data-sharing frameworks, tailored to enhance public service delivery and inclusion.

•                    Assist governments in developing DPI-oriented roadmaps that consider the local context, assess the current state of digital transformation, and outline phased implementation plans aligned with national and regional development goals

•                    Offer technical guidance on leveraging emerging technologies (e.g., AI, blockchain, IoT) to address development challenges, ensuring solutions are inclusive, ethical, and aligned with national priorities.

•                    Provide advisory support on ethical and inclusive AI governance frameworks, including policy design and capacity-building for responsible AI use.

•                    Guide strategic partnership engagement at the country level and facilitate multi-stakeholder consultations to ensure inclusive, cross-sectoral approaches to digital transformation.

C. Capacity Building and Knowledge Codification

•                    Contribute to the design and delivery of online training programs, workshops, or mentoring sessions for policymakers and senior government officials to strengthen institutional capacity.

•                    Contribute to the development and implementation of fellowship programs, aimed at building a network of digital leaders.

•                    Document lessons learned, success stories, and challenges from advisory engagements to inform the development of scalable knowledge products.

•                    Contribute to the development of actionable frameworks, toolkits, assessments, and diagnostics to guide data-driven decision-making in digital investments.

•                    Support the preparation of policy briefs, white papers, and case studies to disseminate insights from the Organisation's digital transformation work.

•                    Produce concise, high-quality briefs, including op-eds, that articulate insights, recommendations, and success stories for strategic audiences

D. Regional Collaboration and Scaling Impact

•                    Facilitate partnerships with governments, private sector leaders, civil society, and academia to co-create solutions for regional digital transformation challenges.

•                    Provide recommendations for scaling successful digital transformation initiatives across countries in the region.

•                    Actively participate in knowledge-sharing events, such as regional platforms or communities of practice, to promote collaboration and learning.

•                    Contribute to donor engagement and resource mobilization efforts by showcasing the impact of digital transformation initiatives.

The following results and outcomes are produced by your engagement:

•                    New government engagements and development programs/projects with the Organisation

•                    A number of reports, reusable frameworks, methodologies, template approaches/mechanisms to development planning and delivery, project and program reviews

•                    Establishment of a reform program inside of the Organisation. You are co-leading the program with the head of the Policy, Innovation and Communications team.

•                    Training and development of the Organisation's staff and government staff in countries the Organisation is engaged with

•                    Mentoring and directing several of the Organisation's staff to build their internal capacity.

•                    Your work will be continued by the Regional Innovation Centre staff across XXXX and the XXXX when your contract ends.

You do not have any people reporting to you.

You will not engage anyone to perform any of your duties.

The role is not an ongoing role at this stage.

You do not have any leave entitlements.

Your work hours are generally dictated by you when working in Australia and you work to set hours when you travel out of Australia.

The Organisation approves your work and outputs, and you are expected to correct any errors.

You pay for your own health expenses and phone and other office expenses. The Organisation pays for your travel and accommodation overseas.

You provide your own computer and phone, and you are not reimbursed for these expenses.

You interact with many external people and bodies in your role. you are invited to share, present to and engage in discussions with Government (public servants and Ministers). You are introduced as a representative of the Organisation and entrusted to lead discussions and explore opportunities with some authority.

You have been asked to take the lead on a Policy Roundtable, which will engage governments across the region, and will establish a vision that the Organisation can then proactively align to and champion with their government and donor partners.

You have been asked to share and present your experience with public servants in all target countries, and to present a new "digital transformation" methodology (which you have developed) as a basis for how the Organisation engages with governments on their ambition and intention for "digital".

You are spending about three quarters of your time in Australia, writing, analysing, preparing, doing online meetings/engagements with the Organisation and Governments, and building frameworks, etc. The other quarter of your time is being in country across XXXX and the XXXX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-15

Income Tax Assessment Act 1997 section 6-20

International Organisations (Privileges and Immunities) Act 1963

Reasons for decision

Assessable income

Section 6-5 of the ITAA 1997 provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources during the income year. This includes income derived from all overseas sources. However, subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income, then it is not assessable income.

An amount is exempt income under section 6-20 of the ITAA 1997, if it is made exempt from income tax by a provision of either the ITAA 1997 or another Commonwealth law. This includes income received by a person who is connected with an international organisation that is exempted by the International Organisations (Privileges and Immunities) Act 1963 (IOPI Act).

Exemption of income under the IOPI Act

Income of tax residents of Australia working for designated international organisations may be exempted from taxation in accordance with the IOPI Act. The application of these benefits to persons performing the work of the Organisation is provided in the Relevant Regulations.

The IOPI Act exempts from taxation certain income of a person connected with an international organisation, to the extent it satisfies all of these elements:

•                     the income is received from an international organisation to which the IOPI Act applies;

•                     the person is connected with the international organisation in one of the specified ways; and

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

The Organisation's Regulations (Regs) were made under the IOPI Act.

The Organisation is an international organisation to which the IOPI Act applies.

Sub regulation 10(1) of the Regs confers on officers (other than high officers) of the Organisation the privileges and immunities specified in Part 1 of the Fourth Schedule of the IOPI Act.

Paragraph 2 of Part 1 of the Fourth Schedule of the IOPI Act provides for an exemption from taxation on salaries and emoluments received from an international organisation by an officer (other than high officer) of the organisation.

Therefore, the payments that you receive in relation to your engagement with the Organisation will be exempt from income tax if it can be shown that you were the holder of an office (but not a high office) of the Organisation.

The Commissioner's view on the meaning of office holder

The terms 'office' and 'office holder' are not defined by the IOPI Act or the ITAA 1997 and therefore, they take their ordinary meaning.

The Commissioner's view on the meaning of office holder is set out in draft Taxation Ruling TR 2024/D2 Income tax: exempt income of international organisations and persons connected with them (the ruling). As specified in paragraph 26 of the ruling, the term 'office' cannot be defined by reference to permanence or succession. Whether a person holds or performs the duties of an office in an international organisation concerns the relationship between that person and that organisation. Paragraph 29 of the ruling states that a holder of an office may include a person who works as an employee of an international organisation, but it does not include a person (whether an employee or not) who is:

•                     locally engaged and paid an hourly rate, or

•                     engaged as an expert or consultant.

•                     Paragraph 27 of the ruling states that whether someone is an office holder is a question of fact, considered on a case-by-case basis. There are six criteria for determining whether a person can be said to hold an office in an international organisation:

Four positive criteria:

•                     a position to which certain duties attach - the office must exist within the international organisation regardless of the individual who occupies the office from time to time, that is if an individual vacates that office, the office continues to exist to be filled by another individual

•                     duties relating to the performance of the organisation's functions - the office must have identifiable duties, functions and responsibilities or powers

•                     a level of authority with respect to the organisation

•                     the position of the person within the international organisation, and the duties and authority associated with it, should make it apparent why the privileges and immunities are conferred.

Two negative criteria, the presence of which would indicate the person is not an office holder:

•                     the position places the person outside the organisational structure

•                     the position does not provide the person with any defined duties or authority with respect to the organisation and its functions - for example, the role is merely an advisory function.

The following example of an office holder is included at paragraph 32 of the ruling:

Person 1 is employed by an organisation that is an international organisation covered by the IOPI Act (as per the Regulations for that organisation). The Regulations provide that income received from the organisation by an office holder of the organisation is income tax exempt and that there are no further conditions or particulars that apply to that exemption. Person1 leads a team that provides ongoing professional advice the organisation relies on to carry out its core functions. Person1 has significant organisational responsibilities and functions, including developing organisational strategy and managing employees. They are also able to engage and enter contracts and make financial commitments on behalf of the organisation. If Person 1 was to leave the organisation, the vacancy would be filled as there is an ongoing need for the responsibilities and functions that they undertake to continue to be performed. Person 1 is a person who is an office holder for the purposes of the IOPI Act.

The case law on the meaning of office holder

In determining who is an office holder, it is not enough to simply be an employee and thereby be regarded as an office holder. An office holder is someone who has identifiable duties, functions, responsibilities or powers to carry out. It does not include an employee who is merely following the command of a higher-ranking person. This does not take away from the fact that an office holder may be an employee; it illustrates however that a person who is an employee is not necessarily or automatically to be taken to be an office holder.

As discussed in paragraphs [31] and [34] of Jayasinghe [2017] HCA 256 (Jayasinghe case), the term 'office' cannot be defined by reference to permanence or succession. Whether a person holds or performs the duties of an office in an international organisation concerns the relationship between the person and that organisation. As per paragraph [37] of the Jayasinghe case, the substance of the terms of the engagement of the person and the relationship between that engagement and the organisation's performing its functions must be considered. Whether someone is an office holder is a question of fact, considered on a case-by-case basis.

It should be clear from the duties and authority associated with the person's position within the international organisation why the privileges and immunities are conferred. As per paragraph [38] of the Jayasinghe case, a person is unlikely to be an 'office holder' if their terms of engagement place them outside the organisational structure and do not include defined duties or authority in relation to the organisation and its functions. This is consistent with the purpose of the IOPI Act to confer privileges and immunities to assist organisations to perform their functions, rather than to personally benefit persons connected with the organisation (see paragraph [39] of the Jayasinghe case and paragraph [54] of Macoun v. FCT (2015) 257 CLR 519).

In Edwards v. Clinch [1982] AC 845 it was held that an office was a position of authority to which duties and functions are attached; an independent post, with some degree of permanence, to which successive people can be appointed.

In Federal Commissioner of Taxation v. Sealy (1987) 19 ATR 582 at 286; 87 ATC 5076, which concerned a managing partner of a grazing partnership, Pincus J said:

The word office has a range of meanings. In some contexts, it refers to a position of authority in a governmental or other public organisation. It is difficult to think of any reason why the legislature should have intended to confine the concession to instances in which the terminated position is one of a public character or of any high degree of permanency. Presumably, no one would dispute that the position of managing director of a public company could be regarded as an office.

In AAT Case 8603 93 ATC 148; 25 ATR 1082, Deputy President BJ McMahon dealt with the case of a taxpayer who had been an Inspector of Schools and who became (when that position phased out) a Cluster Director. Paragraphs [14] and [15] read as follows:

14. The word "office" is a word that had been considered in many cases, but no satisfactory definition has emerged. As was pointed out in Grealy's case [Grealy v. Commissioner of Taxation (1989) 24 FCR 405; (1989) 20 ATR 403; (1989) 89 ATC 4192] the word usually connotes a position of defined authority in an organisation, such as a director of a company, or a tertiary education body. Their Honours held (at 4197 column 2) that it was not a word normally applicable to a relatively low-level employee, such as a university lecturer. As the court observed the applicant, like many holders of professional employment, is not made an office holder merely because her position has a name.

15. This view was consistently taken by the Boards of Review. For example, in Case K4, 78 ATC 29 [(1978) 22 CTBR (NS) 212], Mr Dempsey suggested that an office connotes something more than substantial, something more in the nature of a continuing executive position, the holder of which has distinct responsibilities. In Grealy's case itself, their Honours noted that the word "office" usually connoted a position of defined authority. [additional case citations added]

AAT Case 12,178 (1997) 97 ATC 407; (1997) 37 ATR 1174 concerned a taxpayer who received a payment in respect of unused sick leave when he resigned from his position as a Branch Manager after having successfully won a position of Division Director for the same employer (a local council). In determining the case, one of the issues raised was whether the taxpayer was the holder of an office and whether a retirement or termination had occurred. In that case, Senior Member J Block stated that the 'test as to whether a position is an office will no doubt usually be one involving questions of fact and degree...'

In his findings, Senior Member Block also referred to a few previous cases which looked at the issue of office and at (ATC) 421; (ATR) 1189, he made the following observation:

In Great Western Railway Co v. Bater [1920] 3 KB 266 Rowlett J had held that an office was "a subsisting, permanent, substantive position which had an existence independent of the person who filled it, which went on and was filled in succession by successive holders".

I consider, with respect, that the meaning attributed to the term "office" by Deputy President Thompson in W31 [Case No VT 87/3438 (1989) 20 ATR 3509; (1989) 89 ATC 307] is for Australian purposes, correct. That test would require that it is a position to which "duties are attached, especially a place of trust, authority or service under constituted authority". It is thus clear that the restricted UK view is narrow, when contrasted with the less restricted Australian approach. [additional case citations added]

Application to your circumstances

You entered into a temporary consultant role which will not exist after the end of your engagement. As stated in paragraph 29 of TD 2024/D2, it is the Commissioner's view that individuals engaged as consultants cannot be office holders.

Your role does not have permanence and sits outside the organisational structure. Executive and managerial responsibilities are not central functions of your role as they would be for someone considered to be an office holder.

We do not regard your position to be that of an office holder of the Organisation; therefore, the exemption from taxation on salaries and emoluments you have received from the Organisation is not available to you.

Performing a temporary mission on behalf of the Organisation

The IOPI Act may exempt from tax the income of a person who is 'serving on a committee, or is participating in the work or performing a mission' on behalf of an international organisation. The exemption is provided for in paragraph 2A of Part I of the Fifth Schedule to the IOPI Act.

However, sub regulation 11(1) of the Regs confers on individuals who perform a mission on behalf of the Organisation only those privileges and immunities specified in paragraphs 1, 2, 3, 4, 5 and 6 of Part I of the Fifth Schedule to the IOPI Act. These privileges do not include the exemption from tax specified in paragraph 2A of Part I of the Fifth Schedule.

As noted in paragraph 36 of TR 2024/D2, the reference to performing a mission on behalf of an international organisation is interpreting using its ordinary meaning.

The Explanatory Statement to the Specialized Agencies (Privileges and Immunities) Amendment Regulations 2022 provides a definition of a 'temporary mission' for the purposes of the regulations:

A mission is considered 'temporary' if it exists only for a limited duration and is not permanent. Temporary missions could range from a small number of days up to longer periods. For example, a two-year mission with a nominated end date would be considered a 'temporary mission'. Where an individual undertakes more than one mission or assignment, each mission or assignment would be considered as a separate temporary mission.

A temporary mission can be undertaken by anyone engaged on a contractual basis by the relevant agencies, including experts, consultants, and other individuals.

We note that the explanatory statement regards a 'temporary mission' to be equivalent to an individual work assignment, with such defining characteristics as a limited duration and a nominated end date. The Hamilton case [Hamilton and the Commissioner of Taxation (2020) AATA 1812] provides the defining example of a 'temporary mission' for the purposes of the regulations, the character of those engagements being the completion of a single specific task or assignment.

As explained in paragraph [37] of Hamilton, the predefined work output and completion date which defines a 'temporary mission' is in contrast to an ongoing employment position engaged in the ongoing discharge of a core function of an organisation. Our view is that this distinction remains valid whether or not that position has a contractual termination date.

It is necessary for the mission to be on behalf of the international organisation. Paragraph 39 of TR 2024/D2 provides that for a person to perform a mission on behalf of an international organisation requires the person doing that to represent the organisation to someone else. This connotes some interaction between the international organisation and someone else where the person acts on behalf of the organisation representing it in an official capacity, even if that is only temporarily.

Application to your circumstances

Item 2A of Part I of the Fifth Schedule of the IOPI Act provides an exemption from taxation for people performing a mission on behalf of an international organisation, However, the Regs only provide the privileges and immunities specified in paragraphs 1, 2, 3, 4, 5 and 6 of Part I of the Fifth Schedule to the Act.

Therefore, the payments you receive from the Organisation are not exempted from taxation under section 6-20 of the ITAA 1997.