ATO Interpretative Decision
ATO ID 2001/794 (Withdrawn)
Income Tax
Assessability of United States Air Force pensionFOI 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This ATO ID is withdrawn.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 Foreign income (QC 31917).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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a United States Air Force pension received by an Australian resident taxpayer assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. A United States Air Force pension received by an Australian resident taxpayer is not assessable under section 6-5 of the ITAA 1997.
Facts
The taxpayer is a citizen of the United States of America who has retired from the United States Air Force.
The taxpayer is a resident of Australia for taxation purposes and receives a United States Air Force pension.
Reasons for Decision
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. However, if an amount is exempt income it is not included in the assessable income of a taxpayer (section 6-15 of the ITAA 1997).
Agreements that Australia has with various countries under the International Tax Agreements Act 1953 (the Agreements Act) operates to prevent the double taxation of income. Section 4 of the Agreements Act incorporates that Act with the ITAA 1997 so that both Acts are read as one. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited provisions).
Article 19 of Schedule 2 (the Australia - United States Convention) to the Agreements Act provides that wages, salaries and similar remuneration, including pensions, paid from the funds of the United States of America for labour or personal services performed as an employee in the discharge of governmental functions of the United States of America shall be exempt from tax in Australia.
The United States Air Force pension received by the taxpayer is exempt income and therefore not assessable in Australia under section 6-5 of the ITAA 1997.
Date of decision: 28 June 2001Year of income: Year ended 30 June 2001
Legislative References:
Income Tax Assessment Act 1997
section 6-5
subsection 6-5(2)
section 6-15
section 4
Schedule 2, Article 19
Keywords
Double tax agreements
Exempt income
Foreign income
Foreign pension
Foreign pension income
United States
ISSN: 1445-2782
| Date: | Version: | |
| 28 June 2001 | Original statement | |
| You are here | 23 February 2018 | Archived |
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