You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.
Edited version of private advice
Authorisation Number: 1051796002006
Date of advice: 13 January 2021
Subject: Undeducted purchase price of a foreign pension or annuity
Are you entitled to a UPP deductible amount in respect of your foreign pension?
Yes. The deductible amount has been calculated in accordance subsection 27H(2) and subsection 27H(3) of the Income Tax Assessment Act 1936.
Reasons for Decision
The part of your annual pension or annuity income which represents a return to you of your personal contributions is free from tax. The tax-free portion is called the UPP deductible amount.
It is calculated by dividing the UPP of your pension by either the term of the pension (if fixed), or a life expectancy factor - that applies to you or your spouse if they have a greater life expectancy - according to life expectancy statistics.
The Australian life tables are published by the Australian Government Actuary, and the life expectancy is taken from when the pension first became payable.
The annual UPP deductible amount is calculated using the following formula
A (B - C)
A = relevant share of the pension payable to you
(if all the pension is payable to you then A = 1)
B = is the amount of the UPP of the pension
C = is the residual capital value (if any)
D = is the relevant number.
Your UPP deductible amount in respect of your foreign pension has been calculated using this formula.
This ruling applies for the following periods:
• Year ended 30 June 20XX
• Year ended 30 June 20XX
The scheme commences on:
1 December 20XX
Relevant facts and circumstances
You are a resident of Australia for income tax purposes
Your pension is paid by a scheme maintained overseas
You have provided a copy of emails from the fund to assist the Commissioner in determining the amount of your personal contributions
You currently receive 100% of the pension
The residual capital value of the pension is nil.
Your pension is paid on a monthly basis.
No assumptions have been used in this ruling as it is given on the basis of the facts and circumstances stated above.
Relevant legislative provisions
We took these laws into account:
Income Tax Assessment Act 1936 Subsection 27A(1)
Income Tax Assessment Act 1936 Section 27H
Income Tax Assessment Act 1936 Subsection 27H(2)
Income Tax Assessment Act 1936 Subsection 27H(3)
Income Tax Assessment Act 1936 Subsection 27H(4)
Income Tax Regulations 1936 Regulation 9
Important information to note
For the 2004-05 and later income years, income tax returns may be amended within two years from the date upon which the Commissioner gives notice of assessment. However, where assessments fall outside this period, you will need to lodge an objection and request an extension of time to lodge the objection.
The UPP deductible amount can only be included in your tax return if you have declared your pension income. When including these amounts, they should be translated to Australian currency using the same exchange rate. More information about exchange rates is available from our website by entering 'QC 16583' in the search box on the top right of the page.