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Edited version of your private ruling

Authorisation Number: 1012561358601

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Subject: Foreign income

Question and answer:

Are the pension payments received by the deceased from the Government of Country Y assessable income?

Yes.

This ruling applies for the following periods:

Year ended 30 June 2012

Year ended 30 June 2013

Year ended 30 June 2014

The scheme commenced on:

1 July 2011

Relevant facts and circumstances

The deceased was a resident of Australia for taxation purposes.

The deceased received payments from the government of Country Y.

You state that the payments were a pension.

The pension was paid periodically into a bank account in Country Y.

Payments were received after the deceased's death.

Relevant legislative provisions:

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

Reasons for decision

Pension payments from the Government of Country Y are not dealt with specifically in Australian tax legislation. Therefore we need to turn to general sections concerning income, and in your case, section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) is the appropriate section for consideration.

Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident includes income according to ordinary concepts (ordinary income) derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

Based on case law, it can be said that ordinary income generally includes receipts that:

In this case the pension payments received by the deceased from the government of Country Y had the characteristics of ordinary income as the payments were expected, the payments were relied on, and an element of periodicity, recurrence or regularity is evident as the payments were paid on a periodic basis.

The payments are therefore ordinary income and are assessable under section 6-5 of the ITAA 1997 and should be declared in the estate's tax return.

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