Private ruling: Foreign income
Date of advice: 21 February 2018
Published: June 2018
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Question and answer | Is the income derived by you while in your capacity as a consultant for the Entity taxable in Australia? | Yes.


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 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. The United Nations (Privileges and Immunities) Regulations 1986 (UN(P&I)Regs) were made under the IO(P&I)A. The United Nations (UN) is an international organisation to which IO(P&I)A applies. The United Nations Food and Agriculture Organization (UNFAO) and the International Convention to Combat Desertification (ICCD) are bodies established by the UN. Subregulation 10(1) of the UN(P&I)Regs confers on officers (other than high officers) of the United Nations 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 information as to who is a 'person who holds an office'. The determination states that the Department of Foreign Affairs and Trade (DFAT), who administers the IO(P&I)A and regulations, considers that the phrase 'person who holds an office' covers those people who work as employees of the organisation. DFAT does not accept, however, that the phrase includes either persons who are locally engaged by the organisation and paid at an hourly rate, or persons engaged by the organisation as experts or consultants In your case, you were engaged as a contractor. As you were a contractor, you are not considered an employee of the organisation and a 'person who holds an office'. This means that the exemption from taxation provided by Subregulation 10(1) of the UN(P&I)Regs does not extend to the income you derived from your contracts with your employer. Consequently, the income you derived from the contracts is not exempt from income tax in Australia under the IO(P&I)A, and is therefore assessable in Australia under subsection 6-5(2) of the ITAA 1997.

Relevant facts: You are a resident of Australia for income tax purposes. | You were offered and accepted a consultant’s appointment with an Entity. | ● Support working group meetings – note, themes, follow-up; | ● Draw on the first report and background papers to inform the working groups decisions; | ● Facilitate the contributions of partners in the working group discussions and their inputs for the draft paper; | ● Identify relevant case studies and models to support the recommendations; | ● Draft and finalise the working group paper in collaboration with the working group leaders and under the guidance of the entity’s research co-ordinator, and | ● Prepare a toolkit to guide and support implementation of the working group recommendations by key constituencies. | You completed some assignments in the 2017 income year. | You were paid untaxed lump sum payments bank account. | The work was performed overseas and in Australia.