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This edited version has been archived due to the length of time since original publication.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

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Edited version of your written advice

Authorisation Number: 1013117303402

Date of advice: 31 October 2016

Ruling

Subject: Pensions

Question

Are the pension payments you receive assessable in Australia?

Answer

Yes

This ruling applies for the following period

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on

1 July 20XX

Relevant facts

You are residents of Australia for tax purposes.

You receive an age pension from the country X government.

You pay tax in country X on the pension.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Section 6-10

International Tax Agreements Act 1953 Section 4

International Tax Agreements Act 1953 Section 5

Reasons for decision

Section 6-5 and section 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a taxpayer includes ordinary and statutory income derived directly and indirectly from all sources during the income year.

Ordinary income has generally been held to include three categories, namely income from rendering personal services, income from property and income from carrying on a business.

Other characteristics of income that have evolved from case law include receipts that:

Your regular pension payments retain the characteristics of income as they are expected, relied upon and are have the element of recurrence or regularity and are fully assessable as ordinary income.

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 X agreement is listed in section 5 of the Agreements Act.

The country X agreement is located on a website.

Article 18 of the agreement provides that pensions (other than pensions paid in respect of services rendered in the discharge of government functions) paid to a resident of Australia shall be taxable only in Australia.

Article 19 of the agreement deals with Government Service, provides that pensions paid in respect of services rendered in discharge of governmental functions may be taxed in that State. There is nothing in this article to prevent a pension being taxed in both states.

Therefore, your pension is assessable in Australia.

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