ATO Interpretative Decision
ATO ID 2002/324 (Withdrawn)
Income Tax
Assessability of Australian sourced worker's compensation pension paid to a resident of the United KingdomFOI status: may be released
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This ATO Interpretative Decision is withdrawn from the database because it contains references to the tax treaty between Australia and the United Kingdom that was replaced with a new tax treaty which is effective from 17 December 2003. Despite its withdrawal from the database, this ATO Interpretative Decision continues to be a precedential view in respect of decisions for income years up to, and including, the 2003-2004 income year.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the taxpayer, a resident of the United Kingdom (UK), assessable on an Australian sourced workers compensation pension under subsection 6-5(3) or subsection 6-10(5) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. The taxpayer, a resident of the UK, is not assessable on an Australian sourced workers compensation pension under subsection 6-5(3) or subsection 6-10(5) of the ITAA 1997.
Facts
The taxpayer is a resident of the United Kingdom and a non-resident of Australia for income tax purposes.
The taxpayer is entitled to an Australian workers compensation pension and receives regular payments.
Reasons for Decision
Subsection 6-5(3) of the ITAA 1997 provides that ordinary income derived by a non-resident directly or indirectly from Australian sources, as well as other ordinary income included by a provision on a basis other than having an Australian source, is assessable. Statutory income from all Australian sources, or included by a provision on a basis other than having an Australian source, is also included in an non-resident's assessable income under subsection 6-10(5) of the ITAA 1997.
Section 10-5 of the ITAA 1997 lists those provisions about assessable income. included in this list is section 27H of the Income Tax Assessment Act 1936 (ITAA 1936) which provides that annuities and superannuation pensions are included in assessable income.
In determining liability to Australian tax on Australian sourced income received by a non-resident, it is necessary to consider not only the income tax laws but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (the Agreements Act).
Section 4 of the Agreements Act incorporates that Act with the ITAA 1936 and ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except for some limited provisions).
Schedule 1 to the Agreements Act contains the double tax agreement between Australia and the UK (the UK Agreement). The UK Agreement operates to avoid the double taxation of income received by Australian and UK residents.
Article 14 of the UK Agreement provides that an Australian sourced pension or annuity received by a resident of the UK will be exempt from tax in Australia.
The taxpayer is a resident of the UK and is in receipt of an Australian sourced workers compensation pension. Under Article 14 of the UK Agreement this income is exempt from tax in Australia and therefore it does not part of their assessable income under subsection 6-5(3) of the ITAA 1997 or section 6-10 of the ITAA 1997.
Date of decision: 6 September 2001Year of income: Year ended 30 June 1999 Year ended 30 June 2000 Year ended 30 June 2001 Year ended 30 June 2002 Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1936
section 27H
subsection 6-5(3)
subsection 6-10(5)
section 10-5 International Tax Agreements Act 1953
Schedule 1
Schedule 1, Article 14
Keywords
Non resident individuals
Double Tax Agreements
International Tax
ISSN: 1445-2782
| Date: | Version: | |
| 6 September 2001 | Original statement | |
| You are here | 25 January 2008 | Archived |