ATO Interpretative Decision
ATO ID 2003/1006 (Withdrawn)
Income Tax
Assessability of Japanese age pension paid to resident of AustraliaFOI status: may be released
-
This ATO ID is withdrawn because of a new tax treaty with Japan which in relation to the income tax will apply from 1 July 2009. Despite its withdrawal, this ATO ID continues to be a precedential view in respect of decisions for income years up to, and including, the 2008/2009 income year. Further the result outlined in this ATO ID will also apply under the new treaty with Japan.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 11 September 2009
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 Japanese age pension received by an Australian resident taxpayer assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. A Japanese age pension received by an Australian resident taxpayer is assessable under subsection 6-5(2) of the ITAA 1997.
Facts
The taxpayer is a resident of Australia for income tax purposes.
The taxpayer receives an age pension from Japan.
The pension is paid by the Japanese government.
The pension received by the taxpayer is not in respect of previous employment or service with the Japanese Government.
The pension is exempt from tax in Japan due to the operation of various exemptions in the Japanese income tax law.
Reasons for Decision
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Pensions are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.
In determining liability to Australian tax on foreign sourced income, 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 1997 and the Income Tax Assessment Act 1936 (ITAA 1936) so that those Acts are read as one.
Schedule 6 to the Agreements Act contains the double tax agreement and the protocol between Australia and Japan (the Japanese Agreement). The Japanese Agreement operates to avoid the double taxation of income received by Australian and Japanese residents.
Article 13(1) of the Japanese Agreement provides that pensions derived from sources in Japan by a resident of Australia will be exempt from tax in Japan.
The Japanese Agreement does not exclude the pension income from being taxable in Australia.
Accordingly, as the taxpayer is a resident of Australia, the Japanese age pension received by the taxpayer is assessable under subsection 6-5(2) of the ITAA 1997.
Date of decision: 30 October 2003Year of income: 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 1997
subsection 6-5(2)
section 4
Schedule 6
Schedule 6, Article 13(1)
Keywords
Age pensions
Double tax agreements
International law
Japan
Treaties
ISSN: 1445-2782
| Date: | Version: | |
| 30 October 2003 | Original statement | |
| You are here → | 11 September 2009 | Archived |