Private ruling: Assessable Income
Date of advice: 2 November 2017
Published: March 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Is the income you receive for services as a consultant to the International Organisation (IO) for mission work undertaken in Australia, assessable income? | A1: Yes


Relevant legislative provisions: Income Tax Assessment Act 1997 Sub-section 6-5(2)

Reasons for decision: Summary: Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Income from consultancy services is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997. The International Organisation (Privileges and Immunities) Act 1963 (IOPIA) is a Commonwealth Act under which an international organisation, and persons engaged by it, may be accorded certain privileges and immunities including an exemption from tax. The Commissioner's views on the application of IOPIA are set out in Taxation Ruling TR 92/14 (including Addendum). Paragraph 6 of TR 92/14 states that persons engaged by an international organisation including expert or consultant may be accorded privileges and immunities in the nature of exemption from taxation as described in the Second, Third, Fourth and Fifth Schedules to the IOPIA. However, it is necessary to examine the regulations of the particular International Organisation to ascertain a person's entitlement for taxation exemption. Paragraph 12 of 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. However, limited exemption is provided under regulations regarding the IO. Persons serving on a Committee or participating in the work of, or performing a Mission on behalf of an International Organisation may be accorded exemption from tax on salaries and emoluments received from the organisation. This usually covers experts and consultants engaged by the organisation. Generally, Australia's policy is that experts and consultants are not exempt from tax in Australia. However, limited exemption has been provided under regulations for some organisations. The exemption is denied if the person is an Australian resident and the services are rendered in Australia, unless the person is not an Australian citizen and came to Australia solely to perform his or her duties. | Detailed Reasoning - Conclusion: You did not move to Australia for the purpose of this position, accordingly, the payments received by you from the IO for work undertaken in Australia as a consultant is assessable income under subsection 6-5(2) of the ITAA 1997.

Relevant facts: You are an Australian resident for income tax purposes. | You migrated to Australia, before obtaining the position, with your spouse and children. | You entered into an agreement with IO as a consultant of a particular field. | You did not move to Australia to take up this position. | You receive remuneration payments from the IO for the mission related work undertaken in Australia.