Private ruling: Foreign income – international organisation
Date of advice: 30 May 2018
Published: August 2018
Ruling period: Year ended 30 June 2018 | Year ended 30 June 2019 | Year ended 30 June 2020
Date scheme commenced: 1 July 2017

Ruling: Q1: Is your foreign employment income, which is derived from employment with an International Organisation, exempt from income tax in Australia? | A1: Yes

Relevant facts and circumstances: You are a resident of Australia for taxation purposes You are a staff member of an International Organisation (employer) Your employment is based overseas Your letter of appointment states your employment is for a fixed term Your employer has provided a letter advising that your salary and emoluments received from them are exempt from taxation in Australia in accordance with the applicable convention.

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 subsection 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 states 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. 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 an organ of, or office within, an organisation that is so declared; a commission, council or other body established by such an organisation or organ; and a committee, or sub-committee of a committee, of such an organisation, organ, commission, council or body. Regulations were made under the IO(P&I)A relating to your employer, an international organisation. Your employer is an international organisation to which IO(P&I)A applies. Your employer is an organ of the international organisation. A subregulation of the regulations 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. Taxation Ruling TR 92/14 Income Tax: taxation privileges and immunities of prescribed International Organisations and their staff (TR 92/14) discusses taxation privileges and immunities of prescribed international organisations and their staff. 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 a high officer) of the organisation (paragraph 9 of TR 92/14). Taxation Determination TD 92/153 Income tax: who is a ‘person who holds an office’ as specified in various regulations made under the IO(P&I)A? (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 overseas as a staff member of an organ of an international organisation. As an employee of the 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 international organisation is exempt from tax in Australia. Accordingly, the income you derive from employment 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.