1012387093536 | Legal database

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Edited version of your private ruling

Authorisation Number: 1012387093536

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Ruling

Subject: Assessability of an overseas pension and lump sum payment

Question and answer

Is the pension and lump sum payment you receive assessable in Australia?

Yes.

This ruling applies for the following period:

Year ended 30 June 2012

The scheme commenced on:

1 July 2011

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a resident of Australia for taxation purposes.

You receive a pension and lump sum payment from an overseas pension fund.

This pension is not taxed overseas.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Subsection 6-5(2)

Income Tax Assessment Act 1997 Subsection 52-10(1A)

International Tax Agreements Act 1953 Section 4

International Tax Agreements Act 1953 Schedule 1 Article 17

Reasons for decision

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.

Pension income is ordinary income assessable under subsection 6-5(2) of the ITAA 1997.

In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements.

Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the ITAA 1997 so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations).

Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. Country Y Agreement is listed in section 5 of the Agreements Act.

The Country Y agreement is located on the Austlii website (www.austlii.edu.au) in the Australian Treaties Series database. The agreement operates to avoid the double taxation of income received by residents of Australia and Country Y.

Article 17 of the agreement provides that pensions paid to a resident of Australia shall be taxable only in Australia.

Therefore both the pension and lump sum payment you receive is assessable income in Australia.

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