ATO Interpretative Decision

ATO ID 2003/544

Income Tax

Assessability of Belgian retirement 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This ATO ID contains references to repealed provisions, some of which may have been re-enacted or remade.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.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Decision

Yes. The Belgian retirement 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 retirement pension from Belgium.

The pension is paid by the Belgian Government under the Belgian Social Security system.

The taxpayer did not make any contributions to obtain the 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.

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, 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 the ITAA 1997 where there are inconsistent provisions (except for some limited provisions).

Schedule 13 to the Agreements Act contains the double tax agreement between Australia and the Kingdom of Belgium (the Belgian Agreement). Schedule 13A to the Agreements Act contains the protocol amending the Belgian Agreement (the Belgian Protocol). The Belgian Agreement and the Belgian Protocol operate to avoid the double taxation of income derived by Australian and Belgian residents.

Article 18(1) of the Belgian Agreement provides that pensions and annuities paid to a resident of Australia will be taxable only in Australia.

As the taxpayer is a resident of Australia for income tax purposes, the assessable income of the taxpayer will include the Belgian retirement pension received under subsection 6-5(2) of the ITAA 1997.

Date of decision: 20 June 2003

Year of income: Year ended 30 June 1998 Year ended 30 June 1999 Year ended 30 June 2000 Year ended 30 June 2001 Year ended 30 June 2002

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

International Tax Agreements Act 1953
   section 4
   Schedule 13
   Schedule 13, Article 18(1)
   Schedule 13A

Keywords
Belgium
Double tax agreements
Foreign pension income
International tax

Siebel/TDMS Reference Number: 3555897

Business Line: Public Groups and International

Date of publication: 11 July 2003

ISSN: 1445-2782

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