ATO Interpretative Decision

ATO ID 2002/203

Income Tax

Exempt Australian sourced pension - PAYG tax
FOI status: may be released

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Status of this decision: Decision Current
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Should pay as you go (PAYG) tax be withheld under section 12-80 of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953) from an Australian sourced pension which is exempt from tax in Australia?

Decision

No. PAYG tax should not be withheld under section 12-80 of Schedule 1 to the TAA 1953 from an Australian sourced pension which is exempt from tax in Australia.

Facts

The taxpayer is a non resident for Australian tax purposes.

The taxpayer receives an Australian sourced pension which is exempt from tax in Australia under the relevant double tax agreement.

Reasons for Decision

Section 12-80 of Schedule 1 to the TAA 1953 provides that a payer is to withhold PAYG tax from superannuation pension payments made to an individual.

However, subsection 12-1(1) of Schedule 1 to the TAA 1953 provides that PAYG tax need not be withheld if a payment is exempt income in the hands of the person receiving the payment.

The taxpayer's pension is exempt from income tax in Australia and therefore PAYG tax will not need to be withheld from the pension under section 12-80 of Schedule 1 to the TAA 1953.

Date of decision:  3 October 2001

Legislative References:
Taxation Administration Act 1953
   Schedule 1, subsection 12-1(1)
   Schedule 1, section 12-80

Related ATO Interpretative Decisions
ATO ID 2002/202

Keywords
Foreign pension income
Non resident individuals
PAYG withholding under retirement payments, eligible termination payments & annuities category
PAYG withholding
Superannuation pension income

Business Line:  Small Business/Individual Taxpayers

Date of publication:  28 February 2002

ISSN: 1445-2782

history
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  13 June 2014 Updated statement
  31 March 2017 Archived

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