ATO Interpretative Decision

ATO ID 2003/1022

Income Tax

Assessability of a European Union pension received by a resident taxpayer
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This ATO ID contains references to repealed provisions, some of which may have been re-enacted or remade.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.

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is a pension paid by an institution of the European Union (EU) received by a resident taxpayer assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. A pension paid by an institution of the EU received by a resident taxpayer is assessable under subsection 6-5(2) of the ITAA 1997.

Facts

The taxpayer is a resident of Australia for income tax purposes.

The taxpayer is a former employee of an institution of the EU.

The taxpayer receives a pension in respect of their previous employment with the institution.

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, whether in or out of Australia, during the income year.

A pension received in respect of previous employment is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.

In determining liability to Australian tax on foreign sourced income, 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).

Australia has entered into double taxation agreements with a number of the member countries of the EU. However, Australia does not have a double taxation agreement with the EU.

Accordingly, as the taxpayer is a resident of Australia, the pension received by the taxpayer in respect of former employment with an institution of the EU is assessable under subsection 6-5(2) of the ITAA 1997.

Date of decision: 5 November 2003

Year of income: Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1997
subsection 6-5(2)

Keywords
European Union
Foreign pension income
Foreign tax credits

Siebel/TDMS Reference Number: 3667933

Business Line: Public Groups and International

Date of publication: 14 November 2003

ISSN: 1445-2782

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