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Income made Exempt under the International Organisations (Privileges and Immunities) Act

A draft ruling TR 2024/D2 has been reissued by the ATO that offers guidance on income generated by international organisations and individuals with those international companies. While several factors remain similar to the previous draft ruling, the guidance has been expanded by the ATO in certain areas. The primary focus of the draft ruling is to look at how to check if the particular income of international companies and individuals associated with such international companies is exempt from tax under the International Organisations (Privileges and Immunities) Act (“IOPI Act”).

It will be based on the provisions in the Regulations of the IOPI Act because the extent of the exemptions and concessions can vary between international organisations within these regulations. The regulations can set out:

  • Whether the income of an organisation or individuals associated with that company is exempt from income
  • Whether the company is liable to a specific taxation liability, or
  • How frequently taxation matters apply to that company and individuals associated with it.

The exemption can extend to certain individuals considered connected with that company.

The draft ruling sets out the ATO’s opinion on determining this. It includes guidance on determining when individuals are considered to be running high office in the organisation, attending international conferences organised by the company, and participating in the work of the company.

Part IVA and Failing to Distribute Amounts to Unit Holders

A decision impact statement has been issued by the ATO in response to the full federal court decision. In the Full Federal Court case, a taxpayer won their argument that the anti-avoidance rules in Part IVA didn’t apply. This happened because the trustee of a unit trust decided not to distribute interest income to the holder of its special units. It led to a lower overall tax liability because the interest income ended up being divided among the ordinary unit holders who were foreign residents.

In contrast to the lower non-resident interest withholding rate of 10%, distributions to special unit holders, who are Australian resident companies, would have incurred a higher tax rate at the corporate tax rate.

2024 Cents Per Km Rate

The ATO has issued a new draft legislative instrument that states that the cents per km rate for the 2025 income year will increase to 88 cents per km. It will be adequate for taxpayers who choose to apply the cents per km method while calculating income tax deductions for their work-related car expenses.

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