Taxpayer’s income from United Nations project was not exempt

The High Court (the Court) in Commissioner of Taxation v Jayasinghe [2017] HCA 26 has unanimously allowed the Commissioner’s appeal against the decision of the Full Federal Court, finding that the taxpayer’s income received from the United Nations Office for Project Services (UNOPS) was not exempt. The matter concerned the proper construction of the International Organisations (Privileges and Immunities) Act 1963 (Cth) (IOPI Act), and whether the Commissioner was bound to follow Taxation Determination TD 92/153 (the Determination) in relation to the particular facts of the case.

In relation to the construction of the IOPI Act, in a joint judgment, Chief Justice Kiefel, and Justices Keane, Gordon and Edelman held that the taxpayer was not a person who held an office in an international organisation within the meaning of section 6(1)(d)(i) of the IOPI Act.

The Court also found the Commissioner was not bound to apply TD 92/153 and accordingly treat the income as exempt. By way of background, TD 92/153 indicates salaries received from an international organisation by a person who holds an office in that organisation may be exempt from Australian income tax under regulations made under the IOPI Act. Paragraph 2 of the Determination states:

“The Department of Foreign Affairs and Trade, who administer [the IOPI Act] and regulations, take the view that the phrase ‘person who holds an office’ in relation to a prescribed international organisation covers those people who work as employees for that organisation. They do 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.”

According to the Court, although the Tribunal found that the taxpayer was an employee, because he was engaged by the UNOPS as an ‘expert’, he fell within one of the categories listed in paragraph 2 of TD 92/153 as being an exception. Accordingly, on the proper construction of TD 92/153, the Court found that the Commissioner was not bound to exempt the taxpayer on the income he received from UNOPS.

Approved Occupational Clothing Guidelines 2017

The Approved Occupational Clothing Guidelines 2017, issued on 7 August 2017, sets out criteria that designs of non-compulsory uniforms must meet if the designs are to be entered on the Register of Approved Occupational Clothing (the Register). An employee can claim a tax deduction for the rental, purchase or maintenance of a non-compulsory uniform if the expense is deductible under a provision of the Income Tax Assessment Act 1997 (Cth) and the design of the uniform is entered on the Register. This instrument commences on 1 October 2017 and revokes and replaces the Approved Occupational Clothing Guidelines 2006.