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Edited version of your written advice
Authorisation Number: 1051227856774
Date of advice: 6 June 2017
Ruling
Subject: Assessability of Australian sourced pension for a non resident
Question 1
Are you an Australian resident for tax purposes?
No
Question 2
Is any of your pension income assessable in Australia?
No.
This ruling applies for the following periods:
Year ended 30 June 2015
Year ended 30 June 2016
Year ended 30 June 2017
The scheme commenced on:
1 July 2014
Relevant facts and circumstances
You are a resident of Ireland and are in receipt of a life pension from your previous Australian employer.
The previous employer withholds Australian income tax from the payments it makes to you, and issues payment summaries.
You left Australia over 5 years ago to take up residency in Country A, and have not been back to Australia since.
You have no assets or family in Australia and do not intend to return.
Australia and Country A have a tax treaty between them.
Assumption(s)
N/A
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
International Tax Agreements Act 1953
Reasons for decision
The primary test of tax residency is called the 'resides’ test. If you reside in Australia, you are considered an Australian resident for tax purposes and don't need to apply any of the other residency tests.
You do not reside in Australia.
If you don't satisfy the 'resides’ test, you'll still be considered an Australian resident if you satisfy one of three statutory tests:
● The domicile test: You're an Australian resident if your domicile (broadly, the place that is your permanent home) is in Australia, unless we are satisfied that your permanent place of abode is outside Australia.
Your domicile is in Country A.
● The 183-day test: If you're actually present in Australia for more than half the income year, whether continuously or with breaks, you may be said to have a constructive residence in Australia, unless it can be established that your usual place of abode is outside Australia and you have no intention of taking up residence here.
You left Australia in 2012 and have not returned.
● The superannuation test: This test ensures that Australian government employees working at Australian posts overseas are treated as Australian residents.
You are retired, and are not an Australian Government employee working overseas.
Therefore, you are not an Australian resident for tax purposes.
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a foreign resident includes the ordinary income derived from all Australian sources during an income year.
However, in determining liability to tax on the Australian source income of a foreign resident, it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreement.
In accordance with article 19 of the Double Taxation Treaty between Country A and Australia, pensions that are usually taxable in the source country are only taxable in the country of which the taxpayer is a resident.
Pensions and Annuities
1. Pensions (including government pensions) and annuities paid to a resident of one of the contracting States shall be taxable only in that State.
2. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.
Therefore, as you are a resident of Country A, you are not liable to pay tax on your pension in Australia.
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