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.
If your foreign pension or annuity is not taxable in Australia, do not show it anywhere on your tax return.
For more information, see Did you receive a foreign pension or annuity?
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.
The amount of the offset depends on the amount of foreign tax paid. For more information, see Foreign income tax offset.
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 your 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, Italian pensions, or pensions from another country, see Deductible amount of undeducted purchase price of a foreign pension or annuity.
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.
- For each foreign pension or annuity, select Add and enter information into the corresponding fields.
- 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.
- 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.
- myTax will work out the Assessable amount by subtracting the deductible expenses from the gross income.
- 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.
- At Foreign tax paid: enter the foreign tax paid (in Australian dollars).
- 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.
- Select Save.
- 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?
- Select Save and continue.