ATO Interpretative Decision

ATO ID 2002/202 (Withdrawn)

Income Tax

Assessability of an Australian sourced pension paid to a resident of the United Kingdom
FOI status: may be released

This ATO Interpretative Decision is withdrawn from the database because it contains references to the tax treaty between Australia and the United Kingdom that was replaced with a new tax treaty which is effective from 17 December 2003. Despite its withdrawal from the database, this ATO Interpretative Decision continues to be a precedential view in respect of decisions for income years up to, and including, the 2003-2004 income year.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the taxpayer, a resident of the United Kingdom (UK), assessable on their Australian sourced pension under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. The taxpayer, a resident of the UK, is not assessable on their Australian sourced pension under section 6-5 of the ITAA 1997.

Facts

The taxpayer is a resident of the UK and is a non resident for Australian tax purposes.

The taxpayer has retired and is in receipt of a superannuation pension from their employer.

The taxpayer pays income tax in the UK on this pension.

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.

Section 10-5 of the ITAA 1997 lists those provisions about assessable income. Included in this list is section 27H of the Income Tax Assessment Act 1936 (ITAA 1936) which provides that annuities and superannuation pensions are included in assessable income.

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 International Tax Agreements Act 1953 (the Agreements Act).

Schedule 1 of the Agreements Act contains the double tax agreement between Australia and the UK (the UK Agreement). The UK Agreement operates to avoid the double taxation of income received by Australian and UK residents.

Article 14 of the UK Agreement deals with pensions and annuities. Paragraph (1) of the Article 14 provides that an Australian sourced pension paid to an individual who is a resident of the UK shall the exempt from tax in Australia.

Section 4 of the Agreements Act incorporates that Act with the ITAA 1936 and ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except for some limited provisions).

As the taxpayer is a resident of the UK, the Australian sourced pension they receive will not be assessable under section 6-5 of the ITAA 1997.

Date of decision: 3 October 2001

Legislative References:
Income Tax Assessment Act 1997
   section 6-5
   subsection 6-5(3)
   subsection 6-10(5)
   section 10-5

Income Tax Assessment Act 1936
section 27H

International Tax Agreements Act 1953
   section 4
   Schedule 1, Article 14
   Schedule 1, Article 14(1)

Related ATO Interpretative Decisions
ATO ID 2002/203

Keywords
Double tax agreements
Foreign pension income
Non resident individuals
Superannuation pension income

Business Line: Small Business/Individual Taxpayers

Date of publication: 28 February 2002

ISSN: 1445-2782

history

	Date:	Version:
	3 October 2001	Original statement
You are here	9 November 2007	Archived

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).