ATO Interpretative Decision

ATO ID 2003/180

Income Tax

Assessability of Swiss government pension received by Australian resident
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This ATO ID contains references to repealed provisions, some of which may have been re-enacted or remade.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.

Status of this decision: Decision Current

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 Swiss government pension received by an Australian resident taxpayer assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. A Swiss government pension received by an Australian 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 receives a government pension from Switzerland.

The pension does not relate to the Swiss legislation relating to military insurance.

Reasons for Decision

Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Pensions and annuities are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.

In determining liability to Australian tax on foreign sourced income received by a 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).

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

Schedule 15 to the Agreements Act contains the agreement between Australia and Switzerland (the Swiss Agreement).

Paragraph (1) of Article 18 of the Swiss Agreement provides that pensions and annuities paid to a resident of Australia are taxable only in Australia.

Subparagraph (b) of paragraph (3) of Article 18 of the Swiss Agreement provides that pensions received from Switzerland under the legislation concerning military insurance will be exempt from Australian tax if they are exempt from Swiss tax.

The pension received by the taxpayer is not related to military insurance and therefore is not exempt from tax under subparagraph (b) of paragraph (3) of Article 18 of the Swiss Agreement.

As the taxpayer is an Australian resident for income tax purposes, the Swiss government pension is assessable under subsection 6-5(2) of the ITAA 1997.

Date of decision: 10 March 2003

Year of income: Year ended 30 June 2002 Year ending 30 June 2003 Year ending 30 June 2004 Year ending 30 June 2005 Year ending 30 June 2006

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

International Tax Agreements Act 1953
   section 4
   Schedule 15
   Schedule 15, Article 18, paragraph (1)
   Schedule 15, Article 18, paragraph (3), subparagraph (b)

Keywords
Double Tax Agreements
Foreign pension
Foreign pension income
International tax
Switzerland

Siebel/TDMS Reference Number: 3187113

Business Line: Public Groups and International

Date of publication: 28 March 2003

ISSN: 1445-2782

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