The high Court, in a unanimous decision, has ruled that the income of a civil engineer who worked the United Nations Office of Project Services (‘UNOPS’) in the Sudan was not exempt from being taxed in Australia.
The Taxpayer (Mr Jayasinghe, a qualified civil engineering) was an Australian resident during the relevant income years, but for parts of those years he was engaged by UNOPS to work in Sudan as a project manager under an “individual Contractor Agreement” (“the Agreement”)
His task was “[c]ompletion of the road … on time and under budget” and, upon certification that the services had been satisfactorily performed in accordance with the Agreement, he was to be paid a monthly fee by UNOPS
He argued he should be exempt from paying tax in Australia on this income, because he was “holding an office”.
TheHighCourt agreed with the commissioner’s contention that Mr Jayasinghe did not “hold an office” with the United Nations.
Emphasis was placed on the terms of the individual contractor agreement, including the following:
- Under the Agreement, Mr Jayasinghe has the legal status of an independent contractor of UNOPS, serving in his individual capacity
- He had no authority or other right to enter into any legal or financial commitments or incur any obligations on behalf of UNOPS, and was responsible for paying any tax levied by the Australian Government on his UNOPS earnings
- He did not have the status of an official of the United Nations for the purpose of the 1946 United Nations Convention (he was instead considered an ‘expert on mission’ for the United Nations within the terms of that Convention)
He was solely liable for claims by third parties arising from his own negligent acts or omissions during his service under the Agreement. Under no circumstances was UNOPS liable for such claims by third parties. Accordingly, Mr Jayasinghe was expected to obtain professional liability insurance if providing professional services to UNOPS