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Edited version of your written advice
Authorisation Number: 1013065772377
Date of advice: 3 August 2016
Ruling
Subject: Superannuation pension
Question and answer
Are your superannuation pension income and your superannuation accumulation plan assessable only in Australia?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2016
Year ending 30 June 2017
The scheme commenced on:
1 July 2015
Relevant facts and circumstances
You are a resident of Australia for taxation purposes.
You are a citizen of both country Y and Australia.
You receive a pension.
You worked for the Government in Australia.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Subsection 6-5(2)
Income Tax Assessment Act 1997 Subsection 52-10(1A)
International Tax Agreements Act 1953 Section 4
International Tax Agreements Act 1953 Schedule 1 Article 19
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 assessable under subsection 6-5(2) of the ITAA 1997.
In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements.
Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the ITAA 1997 so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations).
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 Y Agreement is listed in section 5 of the Agreements Act.
The agreement between Australia and country Y operates to avoid the double taxation of income received by residents of Australia and country Y.
ARTICLE XX of the Country Y agreement considers the tax treatment of income from governmental remuneration. It states:
Wages, salaries, and similar remuneration, including pensions, paid from funds of one of the contracting states, of a state or other political subdivision thereof or of an agency or authority of any of the foregoing for labor or personal services performed as an employee of any of the above in the discharge of governmental functions to a citizen of that State shall be exempt from tax by the other Contracting State.
Article XX of the DTA between Australia and country Y is the most relevant section as it deals with governmental remuneration, and you were an employee of the government.
Where the payments are paid by Australia to a citizen of Australia the payments will be exempt from tax in Country Y.
Therefore your pension will only be taxed in Australia.
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