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: 1051953913800

Date of advice: 2 March 2022


Subject: Pension income


Is your military pension paid as a pension or a lump sum assessable in Australia?



This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are a citizen of Australia

You are not a citizen of Country Z.

You are a resident of Country Z for taxation purposes.

You receive a pension from an Australian superannuation scheme in respect of past government service.

You usually receive a fortnightly annuity/superannuation income stream, however, this financial year it was paid to you as a superannuation lump sum.

Tax has been withheld from the payments.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

International Tax Agreements Act 1953

Reasons for decision

In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements.

Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the Income Tax Assessment Act 1997 (ITAA 1997) so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations).

Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. The Country Z Agreement is listed in section 5 of the Agreements Act.

Article 19 considers Governmental remuneration and states:

Wages, salaries, and similar remuneration, including pensions, paid from funds of one of the Contracting States, of a state or other political subdivision thereof or of an agency or authority of any of the foregoing for labor or personal services performed as an employee of any of the above in the discharge of governmental functions to a citizen of that State shall be exempt from tax by the other Contracting State.

Article 21 considers other income and states:

(1) Items of income of a resident of one of the Contracting States, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

(2) [not reproduced]

(3) Notwithstanding the provisions of paragraphs (1) and (2), items of income of a resident of one of the Contracting States not dealt with in the foregoing Articles of this Convention from sources in the other Contracting State may also be taxed in the other Contracting State.

In your case, you are in receipt of a pension which relates to past government service. Therefore, your pension is subject to Article 19 which does not prevent Australia from taxing the pension. The receipt of a pension in a lump sum may not alter its character as a pension. If this is the case, the lump sum payment you received will also be subject to Article 19 and taxable in Australia.

Alternatively, if the lump sum payment you received is not considered to be a 'pension', then Australia is still able to tax the lump sum under Article 21(3).

Your pension paid either as a pension or a lump sum is assessable in Australia.