Macoun v Commissioner of Taxation [2015] HCA 44

The High Court has today (2 December 2015) unanimously dismissed an appeal in the case of Macoun v Commissioner of Taxation [2015] HCA 44. The High Court agreed with the Full Federal Court and found that a former officer of the International Bank for Reconstruction and Development (IBRD) was not entitled to an exemption from taxation in respect of monthly pension payments he had received.

Background

Section 6(1)(d)(i) of the International Organisations (Privileges and Immunities) Act 1963 (Cth) and reg 8(1) of the Specialized Agencies (Privileges and Immunities) Regulations (Cth) confer upon a person who holds an office in an international organisation to which the  Act applies, an exemption from taxation on salaries and emoluments received from the organisation. It was agreed that IBRD was an organisation within the meaning of the Act and thus the Act applied.

The appellant, Mr Macoun, was once a sanitary engineer with IBRD, and as a result, received monthly pension payments from a Retirement Fund established under the IBRD’s Staff Retirement Plan in the 2009 and 2010 financial years. The Commissioner of Taxation included Mr. Macoun’s pension payments as forming part of his assessable income for the 2009-2010 financial years. Upon first review of the decision, the Administrative Appeals Tribunal held that the payments did not form part of his assessable income as it was exempt from Australian income tax.

Full Federal Court

The Full Federal Court allowed a subsequent appeal from the Commissioner. The Court held that the relevant regulation confined the privilege of tax exemption to persons currently holding an office in an international organisation to which the Act applied only. The Court therefore surmised that as Mr. Macoun did not hold office with IBRD for the relevant financial years, the exemption did not apply to his pension payments.

High Court Decision

The High Court dismissed the appeal for the same reason that the Full Court had given. The High Court further added that the pension payments came from the retirement fund plan rather than from IBRD the organisation. Furthermore, the High Court held that the payments to Mr. Macuon did not fall under the meaning of ‘salaries and emoluments’ as specified in the Act. Consequently, Australia’s international obligations did not require the Commissioner to exempt the monthly payments from taxation.  

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Macoun v Commissioner of Taxation [2015] HCA 44