ATO Interpretative Decision

ATO ID 2006/296

Income tax

Assessability of Australian sourced superannuation pension income derived by Austrian resident
FOI status: may be released
  • This ATO ID contains references to repealed provisions, some of which may have been re-enacted or remade.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.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 Australian sourced Commonwealth Superannuation Scheme (CSS) pension income derived by a resident of Austria assessable under subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. Although the Australian sourced CSS pension paid to a resident of Austria is ordinarily assessable under subsection 6-5(3) of the ITAA 1997, Article 19(2)(b) of the Austrian Agreement contained in Schedule 27 of the International Tax Agreements Act 1953 (the Agreements Act) applies, and the pension is not taxable in Australia.

Facts

The taxpayer is a resident of Austria for taxation purposes.

The taxpayer is a citizen of Austria.

The taxpayer receives a pension from the CSS in respect of the taxpayer's employment with the Australian Public Service.

Reasons for Decision

Subsection 6-5(3) of the ITAA 1997 provides that the assessable income of a non-resident taxpayer includes ordinary income derived directly or indirectly from all Australian sources during the income year.

Pensions are ordinary income for the purposes of subsection 6-5(3) 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 double tax agreement contained in the Agreements Act.

Section 4 of the Agreements Act incorporates that Act with the ITAA 1997 so that those Acts are read as one.

Schedule 27 to the Agreements Act contains the double tax agreement between Australia and the Republic of Austria (the Austrian Agreement). The Austrian Agreement operates to avoid the double taxation of income derived by Australian and Austrian residents and also to prevent fiscal evasion with respect to taxes on income.

Paragraph (2) of Article 19 of the Austrian Agreement deals with Government Service pensions. Subparagraph (2)(a) of Article 19 states that a pension paid by Australia in respect of services rendered to Australia shall be taxable in Australia. This includes ComSuper pension payments, such as the CSS pension payments, to a person who was employed in the Australian Public Service. However, subparagraph (2)(b) of Article 19 provides that such pensions shall be taxable only in Austria if the individual is a resident of, and a citizen or national of Austria.

Accordingly, as the taxpayer is a resident and citizen of Austria, the pension income derived by the taxpayer from the CSS in Australia is not assessable under subsection 6-5(3) of the ITAA 1997.

Date of decision:  4 October 2006

Year of income:  Year ended 30 June 2007

Legislative References:
Income Tax Assessment Act 1997
   subsection 6-5(3)

International Tax Agreements Act 1953
   section 4
   Schedule 27
   Schedule 27, Article 19(2)(a)
   Schedule 27, Article 19(2)(b)

Keywords
Superannuation pensions
Double tax agreements
Austria

Siebel/TDMS Reference Number:  5448657

Business Line:  Public Groups and International

Date of publication:  27 October 2006

ISSN: 1445-2782