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  • myTax 2019 Foreign pensions and annuities

    Most foreign pensions and annuities are taxable in Australia, even if tax was withheld from your payment by the country from which the payment came. Examples of foreign pensions and annuities that fall into this category are age and superannuation pensions paid from Austria, Germany, Italy, the Netherlands and the United Kingdom.

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    Essentials

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Under our tax treaties foreign tax authorities tell us about foreign source income paid to (and the tax withheld from) Australian resident taxpayers. We use that information to check tax returns. Make sure you show your foreign income fully and correctly on your tax return.

    The amount of any offset depends on the amount of foreign tax paid. For more information, see Foreign income tax offset.

    If your foreign pension or annuity is paid from a country with which Australia has a tax treaty, you may be able to make arrangements to not have tax withheld from future payments from that country.

    Also include at this section any lump sum payment of your foreign pension that relates to an earlier year.

    Undeducted purchase price (UPP) of a foreign pension or annuity

    You may be entitled to claim a deduction to reduce the taxable amount of the pension or annuity income if your pension or annuity has a UPP. Only some foreign pensions and annuities have a UPP. The UPP is the amount you contributed towards the purchase price of your pension or annuity (your personal contributions).

    That part of your annual pension or annuity income which represents a return to you of your personal contributions is free from tax. This tax-free portion is called the deductible amount of the UPP, and it is usually calculated by dividing the UPP of your pension or annuity by a life expectancy factor, according to life expectancy statistics.

    For more information on Austrian, British, Dutch, German and Italian pensions, or pensions from another country, see Glossary.

    Foreign income tax offset

    You may claim a foreign income tax offset if:

    • the country from which your foreign pension or annuity came withheld tax from your payment
    • you were not entitled to seek a refund of the foreign tax from that country, and
    • the foreign pension or annuity is also taxable in Australia.

    A refund may result from the terms of an agreement between Australia and that country to prevent double taxation.

    Do not show at this section

    If your foreign pension or annuity (including any lump sum payment of your foreign pension or annuity in arrears) is not taxable in Australia, do not show it anywhere on your tax return.

    Completing this section

    You will need the details of your foreign pension or annuity.

    All foreign income, deductions and foreign tax paid must be converted to Australian dollars before you complete this section. You can use the Foreign income conversion calculatorThis link opens in a new window.

    1. For each foreign pension or annuity, select Add and enter information into the corresponding fields.  
      1. At Gross income: if you had foreign tax taken from your pension or annuity, add the amount of foreign tax to the amount of pension or annuity you received.
      2. At Deductible expenses: include any deductible expenses that you incurred in gaining your foreign pension or annuity, excluding any debt deductions such as interest and borrowing costs. Do not include your deductible amount of UPP amount here.
      3. MyTax will work out the Assessable amount by subtracting the deductible expenses from the gross income.
      4. At Undeducted purchase price (UPP): If your foreign pension or annuity does not have a UPP, leave this field blank.
        Otherwise, enter the deductible amount of your UPP, if you know it. If you do not know your deductible amount and have completed a Request for a determination of the deductible amount of UPP of a foreign pension or annuity, leave this field blank. We will address your request in a private binding ruling. If you need information or assistance with this section, phone 13 10 20.
      5. At Foreign tax paid: enter the foreign tax paid (in Australian dollars).
       
    2. For each foreign pension or annuity, answer the question Did you receive a lump sum payment that relates to an earlier year?
      If Yes, enter the Lump sum in arrears amount and the required additional information (year and amount earned), and select Save. If the payment relates to more than one year, select Add and provide additional details.
    3. Select Save.
    4. If you haven't already done so, answer the question During the year did you have an interest - direct or indirect - in overseas assets worth AUD$50,000 or more?
    5. Select Save and continue.

    You may be entitled to a tax offset for any foreign tax paid on this foreign income. If the total amount of your foreign tax paid:

    • does not exceed $1,000, myTax will automatically complete the amount of foreign tax you paid in the Offsets section
    • is greater than $1,000, you will need to work out and enter the foreign income tax offset amount you are entitled to claim. You will need to complete Foreign income tax offset in the Offsets section. For more information, see Foreign income tax offset.
      Last modified: 26 Jun 2019QC 58929