Private ruling: Foreign employment income - international organisation
Published: July 2011
Ruling period: Year ending 30 June 2010 | Year ending 30 June 2011 | Year ending 30 June 2012
Date scheme commenced: 1 July 2009

Ruling: Q1: Is your foreign employment income derived from service with an international organisation exempt from income tax in Australia? | A1: Yes

Relevant facts and circumstances: You are employed by an international organisation on a tribunal based in Country X You also work in Country Y. You are a full-time employee and your income consists of salary and allowances. You are a staff member of the international organisation and subject to the organisation's staff regulations and staff rules. Your income is exempt from taxation Country X under an agreement between the international organisation and the government of Country X.

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 6-20(1).

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 for taxation purposes includes 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 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. Taxation Ruling TR 92/14 discusses taxation privileges and immunities of prescribed international organisations and their staff. Regulations were made under the IO(P&I)A relating to your employer. It is an international organisation to which the IO(P&I)A applies. The tribunal is a body established by the international organisation. A sub-regulation confers on officers (other than high officers) of the international organisation the privileges and immunities specified in Part 1 of the Fourth Schedule of the IO(P&I)A. Paragraph 2 of Part 1 of the Fourth Schedule of the IO(P&I)A 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 (paragraph 9 of TR 92/14). Taxation Determination TD 92/153 provides that the phrase 'person who holds an office' in relation to a prescribed international organisation includes those people who work as employees for that organisation. In your case, you are employed as a staff member by the international organisation on a tribunal. As an employee of the international organisation, paragraph 2 of Part 1 of the Fourth Schedule of the IO(P&I)A provides that the income you derive from service with the organisation is exempt from income tax in Australia. Accordingly, the income you derive from service with the international organisation is exempt income under subsection 6-20(1) of the ITAA 1997, and is therefore not assessable in Australia under subsection 6-5(2) of the ITAA 1997.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.