Private ruling: Income amounts paid under immunity by a Specialized Agency.
Published: August 2012
Ruling period: Period ended 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Is the income you receive from overseas employment under a contract with an International Organization to be included in your assessable income? | A1: No

Relevant facts and circumstances: You are an Australia resident for income tax purposes. You were employed as an Officer by a Specialized Agency Your duties required that you perform your services in an overseas location. You were paid an emolument for your services rendered in accordance with a contract entitled "Special Service Agreement".

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2) | Subsection 6-15(2) | Section 6-20 | International Organisations (Privileges and Immunities) Act 1963 Paragraph 6(1)(d) | Fourth Schedule | Specialized Agencies (Privileges and Immunities) Regulations 1986 | Regulation 2 | Regulation 8 Schedule

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. An emolument is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997. 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. | Detailed Reasoning - Employment in international organisations (Specialized Agencies): Under its domestic law Australia declares its right to impose income tax generally on the world-wide income of Australian residents (as defined in the ITAA) and on the Australian source income of non-residents. Departure from these principles, in the form of privileges and immunities, are contained in specific provisions of Australia's domestic law. The International Organisations (Privileges & Immunities) Act 1963 (the 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)(d) of the IO(P+I)A provides that the Regulations may confer any or all of the privileges and immunities set out in the schedules to the Act. The Specialized Agencies (Privileges and Immunities) Regulations 1986 have been made under the IO(P&I)A. To specify which International Organisations the immunities apply to. Regulation 2 defines a Specialized Agency. | Detailed Reasoning - Individuals employed by Specialized Agencies: Regulation 8(1) of the Specialized Agencies (Privileges and Immunities) Regulations 1986 provides that subject to regulation 8(2), a person who holds an office in a Specialized Agency has the privileges and immunities specified in Part I of the Fourth Schedule to the IO(P+I) A. Item 2 of Part I of the Fourth Schedule prescribes the following privilege and immunity of your office in the Specialized Agency: Exemption from taxation on salaries and emoluments received from the organisation. Therefore, payments you have received in connection with your Special Service Agreement are exempt from income tax under section 6-20 of the ITAA 1997. | Detailed Reasoning - Disclaimer: You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf. The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies. The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.

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