ATO Interpretative Decision

ATO ID 2001/380 (Withdrawn)

Income Tax

Assessability of Swedish pension derived by a resident
FOI status: may be released

This ATO ID is withdrawn as it does not reflect the amendments made to section 27H of the Income Tax Assessment Act 1936 (ITAA 1936). Section 27H of the ITAA 1936 has been amended for the 2007/2008 income year and later income years. This ATO ID contains a view in respect of section 27H of the ITAA 1936. This ATO ID continues to be a precedential view in respect of decisions for income years up to and including the 2006/07 income years.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a Swedish superannuation pension derived by a resident taxpayer assessable income under paragraph 27H(1)(a) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Decision

Yes. The Swedish pension is assessable income under paragraph 27H(1)(a) of the ITAA 1936. The taxpayer is entitled to a foreign tax credit in Australia for Swedish income tax levied on the pension.

Facts

The taxpayer is an Australian resident for taxation purposes in accordance with Australian law and for the purposes of the Double Taxation Agreement (DTA) between Australia and Sweden. The taxpayer is a citizen of Sweden and receives a Swedish government service pension which has tax deducted at source.

Reasons for Decision

Section 6-5 of the Income Tax Assessment Act 1997 provides that an Australian resident is required to declare all income derived directly or indirectly from all sources whether in or out of Australia. Paragraph 27H(1)(a) of the ITAA 1936 specifically states that a superannuation pension derived by a taxpayer is to be included in assessable income.

In determining liability to Australian tax on foreign source income, it is necessary to consider not only the income tax laws, but also any applicable DTA.

Schedule 17 of the International Tax Agreements Act 1953 (the Swedish Agreement) operates to avoid the double taxation of income received by Australian and Swedish residents. Paragraph 18(3) of the Swedish Agreement provides that a government pension paid by Sweden to a Swedish citizen who is a resident of Australia may be taxed by Sweden.

As the taxpayer is an Australian resident for taxation purposes, the taxpayer will be assessed under paragraph 27H(1)(a) of the ITAA 1936 in Australia on the pension income derived from Sweden.

However, paragraph 24(1) of the Swedish Agreement states that, subject to the law of Australia, a credit of Swedish tax paid may be allowable against Australian tax payable in respect of the pension.

Where the taxpayer has been levied Swedish income tax on the pension derived there, a credit will be allowable in Australia against Australian tax payable on that pension

Note: With effect from 1 July 2008 the foreign tax credit system is replaced by the foreign income tax offset system. This ATO ID is still current

Date of decision: 24 July 2001

Legislative References:
Income Tax Assessment Act 1997
section 6-5

Income Tax Assessment Act 1936
paragraph 27H(1)(a)

International Tax Agreements Act 1953
   Schedule 17
   Schedule 17 Article 18(3)
   Schedule 17 Article 24(1)

Keywords
Double tax agreements
Foreign tax credit
Pension
Sweden

Business Line: Small Business/Individual Taxpayers

Date of publication: 29 September 2001

ISSN: 1445-2782

history

	Date:	Version:
	24 July 2001	Original statement
You are here	1 April 2010	Archived

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