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Edited version of your written advice
Authorisation Number: 1012814813057
Ruling
Subject: Request for a determination of the deductible amount of UPP of a foreign pension or annuity
Question 1
Are you entitled to a deductible amount in respect of your foreign pension?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2015
The scheme commenced on:
The scheme has commenced
Relevant facts and circumstances
This ruling is based on the facts stated below. Any material variation from these facts (including any matters not stated in the description above and any departure from these facts) will mean that the ruling will have no effect. Where there is no variation, the ruling can apply for more than just the period mentioned above.
You are resident of Australia for income tax purposes
Your pension is from a retirement fund established and managed outside Australia.
You have provided a copy of your Insurance Resume statement from the fund to assist the Commissioner in determining the amount of your personal contributions
Your pension commenced on dd/mm/yyyy and is payable for life
You currently receive 100% of the pension.
The residual capital value of the pension is nil.
Your pension is paid on a monthly basis.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 27H
Income Tax Assessment Act 1936 Subsection 27H(2)
Income Tax Assessment Act 1936 Subsection 27H(3)
Income Tax Assessment Act 1936 Subsection 27H(4)
Income Tax Regulations 1936 Regulation 9
Reasons for decision
The part of your annual pension or annuity income which represents a return to you of your personal contributions is free from tax. The tax-free portion is called the deductible amount.
It is calculated by dividing the UPP of your pension by either the term of the pension (if fixed), or a life expectancy factor - that applies to you or your spouse if they have a greater life expectancy - according to life expectancy statistics.
The Australian life tables are published by the Australian Government Actuary, and the life expectancy is taken from when the pension first became payable.
The annual deductible amount is calculated using the following formula:
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