| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012419871266
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Assessability of foreign pension income
Question and answer:
Is your foreign pension included in your assessable income in Australia?
No.
This ruling applies for the following periods
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
Year ended 30 June 2017
The scheme commences on
1 July 2013
Relevant facts and circumstances
You are a resident of Australia for income tax purposes.
You are not a citizen of Australia.
You receive a government pension from a foreign country for services rendered as a teacher.
Your pension is not exempt from tax in the foreign country. However, given the amount of your pension you do not have to pay tax on it in the foreign country.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2).
International Tax Agreements Act 1953 Section 4.
International Tax Agreements Act 1953 Sch11-Article18.
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 for the purposes of subsection 6-5(2) of the ITAA 1997.
In determining liability to Australian tax on foreign sourced income, it is relevant 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. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited provisions).
Schedule 11 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 derived by Australian and country X residents.
Article 18(2)(a) of the Agreement provides that any pension paid by country X to an individual in respect of services rendered to country X will be taxable only in country X. However, article 18(2)(b) of the Agreement provides that where an individual is both a resident and citizen of Australia, these pensions will be taxable only in Australia.
In your case, you receive a government pension from country X for services rendered as a teacher and you are a resident of Australia for income tax purposes. However, you are not a citizen of Australia.
Therefore, your pension will not be assessable in Australia as Article 18(2) of the Agreement operates to give country X the sole taxing rights over the pension.
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).
