ATO Interpretative Decision
ATO ID 2001/801 (Withdrawn)
Income Tax
Assessability of South African disability pension - first payable after 1 July 1983FOI status: may be released
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This ATO ID is withdrawn as it does not reflect the amendments made to section 27H of the Income Tax Assessment Act 1936 (ITAA 1936). Section 27H of the ITAA 1936 has been amended for the 2007/2008 income year and later income years. This ATO ID contains a view in respect of section 27H of the ITAA 1936. This ATO ID continues to be a precedential view in respect of decisions for income years up to and including the 2006/07 income years.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 1 April 2010
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is a South African disability pension received by an Australian resident taxpayer and first payable after 1 July 1983, assessable under section 27H of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
Yes. A South African disability pension received by an Australian resident taxpayer and first payable after 1 July 1983 is assessable under section 27H of the ITAA 1936.
Facts
The taxpayer is an Australian resident in receipt of a disability pension from South Africa paid under a personal insurance cover.
The taxpayer could not work because of injuries suffered from an accident and is paid a monthly benefit under the policy to replace lost earnings.
The pension was first payable after 1 July 1983.
Reasons for Decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
As the taxpayer's disability pension is received from South Africa, it is also necessary to look at the Australia-South Africa Double Tax Agreement (the DTA) which is contained in Schedule 42 to the International Tax Agreements Act 1953 (the Agreements Act).
Paragraph (1) of Article 18 (the Pensions and Annuities Article) of the Agreements Act provides that pensions or annuities derived from South Africa by a resident of Australia will be exempt from tax in South Africa to the extent that the pension or annuity is taxable in Australia.
Subsection 27H(1) of the ITAA 1936 provides that annuities first payable on or after 1 July 1983 are included in the assessable income of the taxpayer with the undeducted purchase price excluded if the annuity was purchased.
The Australian resident taxpayer has received a South African disability pension that was first payable on or after 1 July 1983. The assessable income of the taxpayer will include the disability pension under subsection 27H(1) of the ITAA 1936 and accordingly will be exempt from tax in South Africa under the DTA.
Date of decision: 27 September 2001
Legislative References:
Income Tax Assessment Act 1936
section 27H
subsection 27H(1)
subsection 6-5(2) International Tax Agreements Act 1953
Schedule 42, Article 18(1)
Keywords
Disability payments & subsidies
Disability superannuation pension
Double tax agreements
Foreign income
Foreign pension
Foreign pension income
South Africa
ISSN: 1445-2782
| Date: | Version: | |
| 27 September 2001 | Original statement | |
| You are here → | 1 April 2010 | Archived |