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Edited version of your private ruling
Authorisation Number: 1012417196513
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Ruling
Subject: Assessability of Australian pension income
Question and answer
Is your Australian pension assessable to you while you are a foreign resident?
No.
This ruling applies for the following period
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
Year ended 30 June 2017
The scheme commenced on
1 July 2013
Relevant facts and circumstances
You reside overseas.
You are over 60 years of age.
You receive Australian pension income.
You are a foreign residents for tax purposes.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5.
International Tax Agreements Act 1953
Reasons for decision
Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a foreign resident includes the ordinary income derived directly or indirectly from all Australian sources during the income year.
In determining liability to tax on Australian sourced income received by a foreign resident, it is necessary to consider not only the income tax laws but also any applicable tax treaty contained in the International Tax Agreements Act 1953 (the Agreements Act).
A Schedule to the Agreements Act contains the tax treaty between Australia and country X (the Agreement). The Agreement operates to avoid the double taxation of income received by Australian and country X residents.
Subsection 4(1) of the Agreements Act provides that the Agreements Act incorporates the ITAA 1997 and those Acts are read as one. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited situations that are not relevant in the present case).
An Article of the relevant Agreement provides that pensions (including government pensions) and annuities paid to a resident of country X are taxable only in country X.
As you are a resident of country X, your Australian sourced pension income is taxable only in country X. Therefore, your Australian pension does not form part of your assessable income and you are not liable to pay tax on your pension in Australia.
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