ATO Interpretative Decision
ATO ID 2006/23
Income Tax
Assessability of an Australian pension received by a resident of MaltaFOI 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This ATO ID contains references to repealed provisions, some of which may have been re-enacted or remade.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.
Status of this decision: Decision Current
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 Malta, assessable on their Australian sourced pension(s) under subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. The taxpayer, a resident of Malta, is not assessable on their Australian sourced pension(s) under subsection 6-5(3) of the ITAA 1997.
Facts
Taxpayer receives a part age pension, Comsuper pension, and an allocated pension from Commonwealth Bank.
The taxpayer is an Australian citizen who departed Australia in 2005 to live in Malta permanently.
The taxpayer ceased to be a resident of Australia for taxation purposes when they departed Australia in 2005.
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 a non resident's assessable income under subsection 6-10(5) of the ITAA 1997.
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 tax treaty contained in the International Tax Agreements Act 1953 (Agreements Act).
Section 4 of the Agreements Act incorporates that Act with the Income Tax Assessment Act 1936 and ITAA 1997 so that those Acts are read as one.
Schedule 24 of the Agreements Act contains the tax treaty between Australia and Malta (the Maltese Agreement). The Maltese Agreement operates to avoid the double taxation of income received by Australian and Maltese residents.
Article 18 of the Maltese Agreement deals with pensions and annuities. Article 18(1) of the Maltese Agreement provides that an Australian sourced pension paid to an individual who is a resident of Malta shall be taxable only in Malta.
As the taxpayer is a resident of Malta, the Australian sourced pension they receive will not be assessable under subsection 6-5(3) of the ITAA 1997.
Date of decision: 21 December 2005Year of income: Year ended 30 June 2006
Legislative References:
Income Tax Assessment Act 1997
section 6-5
subsection 6-5(3)
subsection 6-10(5)
section 10-5
section 4
Schedule 24, Article 18
Schedule 24, Article 18(1)
Keywords
Double tax agreements
Foreign pension income
Non resident individual
Tax free threshold
Resident/residency
ISSN: 1445-2782