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This edited version has been archived due to the length of time since original publication.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: 1012567753719

Ruling

Subject: International Pension

Question

Is your country X pension assessable in Australia?

Answer

No

This ruling applies for the following period(s)

Year ended 30 June 2012

Year ended 30 June 2013

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 2011

Relevant facts and circumstances

You are a resident of Australia for income tax purposes.

You held a visa and you now have another subclass of visa.

You are not a citizen of Australia but possibly plan to obtain Australian citizenship in a couple of years.

You are a citizen of Country X and will remain so, even if you obtain Australian citizenship.

You are a retired employee of a Country X government.

You receive a government pension from Country X.

Your pension is paid into your country X bank account.

Relevant legislative provisions

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

International Tax Agreements Act 1953 Section 4

International Tax Agreements Act 1953 Section 5

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).

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. The Country X is listed in section 5 of the Agreements Act.

An article of the Country X Agreement provides that any pension paid by Country X to an individual in respect of services rendered to Country X shall be taxable only in Country X. However, the article of the Country X Agreement also provides that where an individual is a resident and citizen of Australia, and if the individual is not a citizen of Country X then the pension will be taxable only in Australia.

In your case:

Therefore, your pension will not be assessable in Australia as the Article of Country X 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).