Private ruling: Foreign income - International Organisation
Published: February 2015
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2014

Ruling: Question and answer | Is the income you will earn working for International Organisation X exempt from income tax in Australia? | Yes

Relevant facts and circumstances: You are an Australian resident for income tax purposes. You will be employed by International Organisation X to work on an aid project in country Y. Your position is human resource specialist. The International Organisation X has advised your salary is exempt from tax in the country Y.

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 Other references: | International Organisations (Privileges and Immunities) Act 1963 subparagraph 6(1)(e)(i) | International Organisations (Privileges and Immunities) Act 1963 schedule 5, paragraph 2A

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. 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 X 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 X, 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 X, the income you will receive from the International Organisation X is exempt from Australian tax in accordance with the IO(P&I)A and the Regulations relating to that organisation made under that Act.