Private ruling: Income from specialized agencies.
Published: June 2015
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Question and Answer | Is your employment income from the International Organization assessable? | No.

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. You are employed by an international Organization. Your income is sourced outside Australia. You have provided a statement of earnings from your employer identifying you as an official of the Organization within the meaning of Article IV of the Convention on the Privileges and Immunities of the Specialized Agencies.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5(2) | Income Tax Assessment Act 1997 Section 6-15 | Income Tax Assessment Act 1997 Section 6-20 | International Organisations (Privileges and Immunities) Act 1963 Subsection 3(1) | International Organisations (Privileges and Immunities) Act Subsection 5(1) | International Organisations (Privileges and Immunities) Act Part 1 of Fourth Schedule | Specialised Agencies (Privileges and Immunities) Regulations 1986 Regulation 3 | Specialised Agencies (Privileges and Immunities) Regulations 1986 Sub-regulation 8(1) | Specialised Agencies (Privileges and Immunities) Regulations 1986 Schedule of Specialized Agencies.

Reasons for decision: Summary: Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident includes 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 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. Subsection 5(1) of the IO (P&I)A provides that the Specialised Agencies (Privileges & Immunities) Regulations 1986 (SA(P&I) Regulations) may declare an organisation to be an organisation to which the IO(P&I)A applies. 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. Regulation 3 of the SA (P&I) Regulations says that each Specialized Agency is an international organisation to which the IO(P&I)A applies, the Organisation is an international organisation listed in the schedule to the regulations, therefore the IO(P&I)A applies. Entitlement to exemption under the IO (P&I) A depends on whether you were engaged as an Independent consultant or as a person who held an office in the Specialized Agency. You have provided documentation which confirms that you are employed as an official. Under subregulation 8(1) of the SA(P&I) Regulations a person who holds an office, other than a high office, in a Specialized Agency, has the privileges and immunities specified in Part 1 of the Fourth Schedule to the IO(P&I)A, including income tax exemption on salaries and emoluments received from the organisation. You are entitled to the privileges and immunities specified in Part 1 of the Fourth Schedule to the IO (P&I) A as you have advised that you hold an office in the Specialized Agency. Accordingly, the income derived by you as holder of an office with the Specialized Agency is not assessable.