Private ruling: overseas income
Date of advice: 7 August 2017
Published: November 2017
Ruling period: Year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Is the income derived by you as a consultant to the overseas organisation assessable income in Australia? | A1: Yes.


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 Section 6-20 | Income Tax Assessment Act 1936 Section 23AG | International Organisation (Privileges and Immunities) Act 1963 | Specialized Agencies (Privileges and Immunities) Regulations 1986

Reasons for decision: Summary: 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. 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 provides 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 & 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 all or any of the privileges and immunities set out in Part I of the Fifth Schedule of the IO(P&I)A upon a person who serves on a committee, or, participates in the work of, or, performs a mission on behalf of, an international organisation to which this Act applies. The Organisation is listed in the Schedule to the Specialised Agencies (Privileges & Immunities) Regulations 1986 (SA(P&I) Regs). The SA(P&I) Regs are made under section 6 the IO(P&I)A. The organisation is an agency of the overseas organisation. Regulation 9 of the SA(P&I) Regs does not provide any income tax exemption for persons serving on a committee or performing a mission (such as independent consultants) for the overseas organisation. In your case you received income as a result of a contract with the organisation to provide consultancy services. You are not an employee of the organisation. Therefore, the income you received as a consultant of the organisation for the provision of services carried out overseas, is assessable under subsection 6-5(2) of the ITAA 1997 and must be declared in your Australian tax return.

Relevant facts: You are an Australian resident for tax purposes. | You were contracted as a consultant for the organisation in the 2016 income year. | You performed your duties overseas.