Private ruling: Assessability of consultant income
Published: December 2013
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2013

Ruling: Questions and answers | 1. Will the remuneration you receive for consultant services performed in Australia for the international organisation be assessable in Australia? | Yes. | 2. Will the remuneration you receive for consultant services performed in overseas countries for the international organisation be assessable in Australia? | No.

Relevant facts and circumstances: You are an Australian resident for taxation purposes. You are contemplating taking up a contract with an international organisation as a consultant. The majority of your work activities will be carried out in overseas countries with some being carried out in Australia.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Subsection 6-15(2). | Income Tax Assessment Act 1997 Section 6-20. | International Organisations (Privileges and Immunities) Act 1963.

Reasons for decision: Summary: Section 6-5 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 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 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. Paragraph 6(1)(e) of the IO(P+I)A provides that a person who is performing, whether alone or jointly with other persons, a mission on behalf of an organisation is exempt from taxation on salaries and emoluments received from the organisation under paragraph 2A of Part I of the Fifth Schedule to the IO(P+I)A. The Commissioner's view as to the assessability of remuneration derived from International Organisations is clarified (taking into account the IO(P+I)A) in Taxation Ruling TR 92/14 Income tax: taxation privileges and immunities of prescribed International Organisations and their staff (TR 92/14). TR 92/14 provides that Australia's general policy is that salaries and emoluments received by experts and consultants engaged by international organisations are not exempt from tax in Australia. Exemption is provided under regulations regarding the international organisation you will consult for, however the exemption is denied if the individual is an Australian resident and the services are rendered in Australia. In your case, you are a resident of Australia, and you will receive remuneration for consultant services performed for the international organisation both in Australia and overseas. Accordingly, the remuneration you receive for work carried out in Australia will be assessable under section 6-5 of the ITAA 1997 as there is no exemption available. The remuneration you receive for work carried out in an overseas country will not be assessable under section 6-5 of the ITAA 1997 as the payment is exempt under section 6-20 of the ITAA 1997.