ATO Interpretative Decision
ATO ID 2004/357
Income Tax
Assessability of Romanian pension received by Australian residentFOI 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This ATO ID contains references to repealed provisions, some of which may have been re-enacted or remade.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
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 pension received by an Australian resident from Romania assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. A pension received by an Australian resident from Romania 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 pension from Romania.
The pension is a social security pension paid by the Romanian government.
Eligibility for the pension is based on the taxpayer's age and years of employment experience.
The taxpayer was not required to make any contributions in order to receive the pension.
Reasons for Decision
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident includes all ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Pensions are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.
In determining liability to Australian tax of foreign sourced income received by an Australian 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.
Schedule 45 to the Agreements Act contains the double tax agreement and protocol between Australia and Romania (the Romanian Agreement). The Romanian Agreement operates to avoid double taxation of income received by Australian and Romanian residents.
Article 18(1) of the Romanian Agreement provides that pensions (including government pensions) and annuities paid to a resident of Australia shall be taxable only in Australia.
Accordingly, as the taxpayer is a resident of Australia, the pension received by the taxpayer from Romania is assessable under subsection 6-5(2) of the ITAA 1997.
Date of decision: 23 April 2004Year of income: Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1997
subsection 6-5(2)
section 4
Schedule 45
Schedule 45, Article 18(1)
Keywords
Double tax agreement
Foreign pension income
Romania
Treaties
ISSN: 1445-2782
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
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).
