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Edited version of private ruling
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Ruling
Subject: Assessability of overseas pension
Question and Answer
Is your pension from the United Kingdom assessable in Australia?
No.
This ruling applies for the following period
1 July 2009 to 30 June 2010
Relevant facts and circumstances
You are an Australian resident for taxation purposes
You are a temporary resident
You hold a specific class retirement visa
You receive a pension from an overseas country
You want to pay the tax on your pension in the overseas country
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2).
Income Tax Assessment Act 1997 Subsection 6-5(2)
Income Tax Assessment Act 1997 Subdivision 768-R
Income Tax Assessment Act 1997 Section 768-910.
Income Tax Assessment Act 1997 Section 995-1.
Income Tax Assessment Act 1997 Subsection 995-(1)
Reasons for decision
Subsection 6-5(2) of the ITAA 1997 provides that 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. The pension income derived by the taxpayer from the overseas country is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.
However, Subdivision 768-R of the ITAA 1997 provides tax relief for most foreign income derived by temporary residents of Australia.
In particular, section 768-910 of the ITAA 1997 provides that ordinary income derived from a foreign source, excluding employment related income and capital gains on shares and rights acquired under employee share schemes, is non-assessable non-exempt income when derived by a temporary resident of Australia.
The taxpayer's income from the overseas pension, being ordinary income from a foreign source, is non-assessable non-exempt income under subsection 768-910(1) of the ITAA 1997 as the taxpayer was a temporary resident of Australia when the taxpayer derived it.
Subsection 6-15(3) of the ITAA 1997 provides that if an amount is non-assessable non-exempt income, it is not assessable income. Therefore, the taxpayers pension income from the overseas country is not assessable income.
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