EXPLANATORY STATEMENT
INTERNATIONAL ORGANIZATIONS (PRIVILEGES AND IMMUNITIES)
ACT 1963 - ASIAN DEVELOPMENT BANK (PRIVILEGES AND
IMMUNITIES) REGULATIONS (AMENDMENT)
Statutory Rules 1983 No.133 Issued by the Authority of the Minister of State for Foreign Affairs
The purpose of these Regulations is to accord to persons serving on committees, and participating in the work, of the Asian Development Bank (ADB) and those performing whether alone or jointly with other persons, a mission on behalf of the ADB, exemption from tax to which they would otherwise be liable on income paid to them by the ADB.
The ADB is an international development institution created in 1966 under the auspices of the United Nations Economic and Social Commission for Asia and the Pacific, then known as the United Nations Economic Commission for Asia and the Far East. Its main role is to promote the economic and social progress of its developing member countries by lending funds and providing technical assistance.
The Agreement Establishing the Asian Development Bank came into force generally on 22 August 1966 and it came into force for Australia on 19 September 1966. The ADB has members from within and outside the region, including both developing and developed countries. Its Headquarters are in Manila.
When Australia became a Party to the Agreement Establishing the ADB, it agreed, as an obligation of membership, to accord the ADB and certain persons associated with it a range of privileges and immunities. The Asian Development Bank (Privileges and Immunities) Regulations were made on 29 December 1967 under the International Organizations (Privileges and Immunities) Act 1963 (the Act) in order to implement this obligation.
One aspect of the Agreement Establishing the ADB, however, could not be implemented in the Regulations because the Act did not confer the authority to do so. The Act did not authorize the making of Regulations exempting from Australian income tax the class of persons usually described as experts of the organization.
The Act was amended in 1982 (No.4 of 1982, Section 6) and it now authorizes the making of Regulations exempting experts of an organization to which the Act applies from Australian income tax.
These Regulations have the effect of exempting from Australian income tax the salary and emoluments paid by the ADB to persons serving on a committee, or participating in the work, of the ADB or performing, whether alone or jointly with other persons, missions on behalf of the ADB. Such persons are usually described as experts.
The exemption does not to apply to residents of Australia in relation to income earned in Australia unless the expert is not an Australian citizen and came to Australia solely for the purpose of performing his duties as an expert of the ADB.
Overview
The International Organizations (Privileges and Immunities) Act 1963 was enacted to provide a legal framework that recognises and implements the privileges and immunities of international organisations and their officials, ensuring their effective functioning within Australia. The Act was introduced to address the need for a structured approach to handling the legal status and tax implications of international entities operating in Australia. Enacted by the Parliament of Australia, the primary policy objective of the Act is to facilitate the smooth operation of international organisations by granting necessary protections and exemptions, thereby fostering international cooperation and development.
The Asian Development Bank (Privileges and Immunities) Regulations (Amendment) Statutory Rules 1983 No.133, issued under the authority of the Minister of State for Foreign Affairs, amends the original regulations made under the Act. The amendment was necessitated by the Act's previous lack of authority to exempt experts of international organisations from Australian income tax. By addressing this gap, the Regulations ensure that experts of the Asian Development Bank, who serve on committees or participate in the work of the Bank, are exempt from Australian income tax on their emoluments, unless they are Australian residents working within Australia. This amendment aligns the Australian legal framework with the operational needs of the Asian Development Bank and reinforces Australia's commitment to supporting international economic and social development.
Scope and Application
The International Organizations (Privileges and Immunities) Act 1963 applies to international organisations and their associated personnel, aiming to provide certain privileges and immunities in recognition of their international status and to facilitate their operations in Australia. Specifically, these Regulations, which were amended in 1983, apply to the Asian Development Bank and its experts, defined as those serving on committees, participating in the work, or performing missions on behalf of the ADB. This exemption extends to income earned through these activities, ensuring that such individuals are not subject to Australian income tax on the income they receive from the ADB. The geographic scope of the Act and these Regulations is national, encompassing all activities within Australia. However, the tax exemption does not apply to Australian residents unless the expert is a non-citizen and has come to Australia solely to perform their duties for the ADB. The application of the Act can be further extended or specified through subordinate instruments, such as the Regulations, which provide detailed provisions on the types of income and persons covered by the tax exemptions.
Key Provisions
The Asian Development Bank (Privileges and Immunities) Regulations (Amendment) Statutory Rules 1983 No. 133, issued under the authority of the Minister of State for Foreign Affairs, amend the existing regulations to accord tax exemptions to certain individuals associated with the Asian Development Bank (ADB). According to section 1 of the Regulations, the primary purpose is to exempt from Australian income tax the income earned by individuals who serve on committees or participate in the work of the ADB, or perform missions on behalf of the ADB. These individuals are typically referred to as experts of the ADB. This amendment is made possible by changes to the International Organizations (Privileges and Immunities) Act 1963, which now authorizes such tax exemptions.
The Regulations impose obligations on the ADB and the individuals benefiting from these tax exemptions. The ADB must ensure that the income paid to eligible individuals is exempt from Australian income tax, as specified in section 2. These individuals, in turn, must meet certain criteria to qualify for the exemption. For example, they must be serving on a committee or participating in the work of the ADB, or performing missions on behalf of the ADB. Additionally, if an expert is a resident of Australia, the exemption will only apply if they are not an Australian citizen and came to Australia solely for the purpose of performing their duties as an expert of the ADB.
Failure to comply with the provisions of the Regulations can result in legal consequences. While the Regulations themselves do not explicitly outline offences, penalties, or civil/criminal consequences for breach, it is implied that non-compliance could lead to the loss of the tax exemption. This could potentially result in the individuals owing income tax on their earnings from the ADB. Additionally, the ADB could face legal repercussions for failing to adhere to the tax exemption requirements, potentially impacting its operations and relationships with member countries. It is important to note that specific penalties for breaches of the Regulations are not detailed within the text of the document.