ATO Interpretative Decision
ATO ID 2003/1095
Income Tax
Assessability of Irish pension received by an Australian residentFOI status: may be released
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This ATO ID contains references to repealed provisions, some of which may have been re-enacted or remade. The ATO ID is current in relation to the re-enacted or remade provisions.
Australia's tax treaties and other agreements except for the Taipei Agreement are set out in the Australian Treaty Series. The citation for each is in a note to the applicable defined term in sections 3AAA or 3AAB of the International Tax Agreements Act 1953.
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 pension received from the Republic of Ireland (Ireland) by a resident taxpayer assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. A pension received from Ireland by an Australian resident taxpayer is assessable under subsection 6-5(2) of the ITAA 1997.
Facts
The taxpayer is a citizen of Ireland.
The taxpayer is a resident of Australia for Australian tax purposes and for the purposes of the double tax agreement between Australia and Ireland contained in Schedule 20 to the International Tax Agreements Act 1953 (the Agreements Act).
The taxpayer receives a pension from Ireland.
Reasons for Decision
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident 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 Agreements Act.
Section 4 of the Agreements Act incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and ITAA 1997 so that those Acts are read as one.
Schedule 20 to the Agreements Act contains the double tax agreement between Australia and Ireland (the Irish Agreement). The Irish Agreement operates to avoid the double taxation of income received by Australian and Irish residents.
Article 19(1) of the Irish Agreement provides that pensions and annuities paid to a resident of Australia shall be taxable only in Australia.
Accordingly, as the taxpayer is a resident of Australia, the Irish pension received by the taxpayer is assessable under subsection 6-5(2) of the ITAA 1997.
Date of decision: 18 November 2003Year of income: Year ended 30 June 2003 Year ended 30 June 2004 Year ended 30 June 2005 Year ended 30 June 2006 Year ended 30 June 2007
Legislative References:
Income Tax Assessment Act 1997
subsection 6-5(2)
section 4
Schedule 20
Schedule 20, Article 19(1)
Keywords
Foreign pension income
Double tax agreements
International law
Republic of Ireland
Treaties
ISSN: 1445-2782