ATO Interpretative Decision
ATO ID 2005/283 (Withdrawn)
Income tax
Assessability of a Spanish disability pension received by an Australian residentFOI status: may be released
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This ATO ID is withdrawn. Guidance on the issue contained in this ATO ID can be found at the following Foreign Income; TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreements.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 Spanish disability pension received by a resident of Australia assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. The Spanish disability pension received by a resident of Australia is assessable under subsection 6-5(2) of the ITAA 1997.
Facts
The taxpayer is an Australian resident for income tax purposes.
The taxpayer receives a disability pension from the Spanish Government.
The pension is not in respect of services rendered to the Spanish Government.
Reasons for Decision
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes the ordinary income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
A disability pension is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.
In determining the liability of an Australian resident to Australian tax on foreign sourced income, it is also necessary to consider the provisions of 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 Income Tax Assessment Act 1936 and ITAA 1977 so that those Acts are read as one.
Schedule 39 to the Agreements Act contains the double tax agreement between Australia and the Kingdom of Spain (the Spanish Agreement). The Spanish Agreement operates to avoid the double taxation of income received by Australian and Spanish residents.
Article 18(1) of the Spanish Agreement applies to pensions, other than those paid by, or out of funds created by, a Contracting State to an individual in respect of services rendered to that State.
Article 18(1) of the Spanish Agreement provides that pensions paid to a resident of Australia are taxable only in Australia.
As the pension is not paid in respect of services rendered to the Spanish Government, Article 19 of the Spanish Agreement does not apply.
As the taxpayer is a resident of Australia, their pension will be assessable under subsection 6-5(2) of the ITAA 1997.
Date of decision: 24 May 2004Year of income: 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 39
Schedule 39, Article 18(1)
Schedule 39, Article 19
Keywords
Double tax agreements
Foreign pension income
International tax
Spain
ISSN: 1445-2782
| Date: | Version: | |
| 24 May 2004 | Original statement | |
| You are here | 19 December 2018 | Archived |