ATO Interpretative Decision

ATO ID 2003/680

Income Tax

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the taxpayer, a resident of France, assessable under section 27H of the Income Tax Assessment Act 1936 (ITAA 1936) on their Australian sourced superannuation pension paid by Australia for services rendered to Australia?

Decision

Yes. The Australian sourced government superannuation pension received by the taxpayer, a resident of France, is assessable under section 27H of the ITAA 1936 as Article 18(3)(a) of Schedule 11 to the International Tax Agreements Act 1953 (the Agreements Act) applies.

Facts

The taxpayer is a resident individual of France and a non resident of Australia for income tax purposes.

The taxpayer is neither a national nor a citizen of France.

The taxpayer receives a government superannuation pension from an Australian resident complying superannuation fund for services rendered to Australia.

Reasons for Decision

Subsection 6-10(5) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a non resident taxpayer's assessable income includes statutory income from all Australian sources and other statutory income included by a provision on a basis other than having an Australian source.

Section 10-5 of the ITAA 1997 lists those provisions about assessable income. Included in this list is section 27H of the ITAA 1936 which provides that annuities and superannuation pensions are included in assessable income.

The taxpayer is a resident individual of France, a country with which Australia has entered into a double tax agreement. Therefore, the double tax agreement between Australia and French Republic and the protocols to that agreement (the French Agreement) contained in Schedules 11 and 11A to the Agreements Act must be considered in determining whether the pension received by the taxpayer is taxable in Australia.

Section 9A and section 9B of the Agreements Act gives the French Agreement the force of law in Australia. Subsection 4(1) of the Agreements Act provides that the ITAA 1936 and ITAA 1997 must be read as one with the Agreements Act. Subsection 4(2) of the Agreements Act provides that in the event of inconsistent provisions, the Agreements Act overrides the ITAA 1936 and ITAA 1997 (except in some limited situations).

Article 18(3)(a) of the French Agreement (substituted by Article 7 of Schedule 11A of the French Agreement) provides that any pension paid by, or out of funds created by, Australia to an individual in respect of services rendered in Australia shall be taxable only in Australia. However, under Article 18(3)(b) of the French Agreement, such pension shall be taxable only in France if the individual is a resident of, and a national or citizen of France.

As the taxpayer is not a national or citizen of France, Article 18(3)(b) of the French Agreement will not apply.

Article 18(3)(a) of the French Agreement applies as the pension is paid by Australia to the taxpayer in respect of government services rendered.

Accordingly, the Australian sourced superannuation pension received by the taxpayer is assessable under section 27H of the ITAA 1936.

Year of income:  Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1936
   section 27H

Related ATO Interpretative Decisions
ATO ID 2003/681

Keywords
Complying superannuation funds
Double tax agreements
Eligible termination payments
France
Non resident individuals
Superannuation pensions

Business Line:  Public Groups and International

Date of publication:  1 August 2003

ISSN: 1445-2782