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Edited version of private ruling
Authorisation Number: 1011819308763
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Ruling
Subject: Assessability of foreign pension
Question 1
Is the social security benefit you receive from another country assessable in Australia?
Answer
No
This ruling applies for the following period
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commenced on
01 July 2005
Relevant facts
You are an Australian resident for income tax purposes.
You receive social security benefits from another country.
You have been receiving monthly benefits for a number of years.
You have been previously issued with two rulings on the same issue.
You are requesting confirmation that the social security benefits from the other country are still exempt from tax in Australia.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
International Tax Agreements Act 1953 Section 4
International Tax Agreements Act 1953 Sch 2-Para18(2)
Reasons for decision
Question 1
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (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.
Australia has agreements with various countries under the International Tax Agreements Act 1953 (Agreements Act) that operate to prevent the double taxation of income.
Section 4 of the Agreements act incorporates that Act with the ITAA 1997 so that both Acts are read as one. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited provisions).
A paragraph of the treaty Australia has with the other country provides that social security payments made by the other country to a resident of Australia shall only be taxed in the other country.
In your case, you are an Australian resident in receipt of social security benefits from the other country. As these benefits are taxed only in the other country, they are not assessable income under subsection 6-5(2) of the ITAA 1997.
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