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Edited version of your written advice

Authorisation Number: 1051272813623

Date of advice: 23 August 2017

Ruling

Subject: Assessability of war disablement pension

Question

Is your Foreign Country X war disablement pension assessable income?

Answer

No

This ruling applies for the following periods:

Year ending 30 June 2018

Year ending 30 June 2019

Year ending 30 June 2020

Year ending 30 June 2021

Year ending 30 June 2022

The scheme commences on:

1 July 2017

Relevant facts and circumstances

You are a resident of Australia.

You were medically discharged from the Foreign Country X Armed Services.

As the disability for which you were discharged was accepted by the Foreign Country X government as attributable to your army service, the pension was exempt from taxation in Foreign Country X.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 53-10

Income Tax Assessment Act 1936 Paragraph 23AD(3)(c)

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

Income Tax Assessment Act 1997 Subsection 6-15(2)

Income Tax Assessment Act 1997 Section 11-5

Income Tax Assessment Act 1997 Section 52-65

Reasons for decision

Included in the list of exemption income in Income Tax Assessment Act 1997 (ITAA 1997) section 11-5 is section 53-10 of the ITAA 1997 which deals with wounds and disability pensions.

Section 53-10 of the ITAA 1997 provides that wounds and disability pensions (Item 5) are wholly exempt provided that the payment is:

Subsection 315(2) of the Act provides that income from wounds and disability pensions are exempt from income tax if they are:

Section 53-10 of the ITAA 1997 has equivalent wording to the repealed paragraph 23AD(3)(c) of the Income Tax Assessment Act 1936 (ITAA 1936). The application of paragraph 23AD(3)(c) of the ITAA 1936 is considered in

Taxation Ruling IT 2586 Income tax: wounds and disability pensions paid by foreign government: whether exempt.

IT 2586 states that the Commissioner accepts that the exemption provided in paragraph 23AD(3)(c) of the ITAA 1936 applies to any such pensions payable by any government and the exemption applies irrespective of the age of the pensioner.

As the wording of paragraph 23AD(3)(c) of the ITAA 1936 is equivalent, in all relevant respects, to section 53-10 of the ITAA 1997 it is appropriate that the reasoning in IT 2586 should be applied to the interpretation of section 53-10 of the ITAA 1997.

In your case, the pension received by you is a war disability pension paid by reason of your disability arising out of wounds and injuries suffered while a member of the Foreign Country X armed forces. The pension is of the same type as payments under subsection 315(2) of the Act. Therefore your pension meets the first requirement for exemption under section 53-10 of the ITAA 1997.

Accordingly, your Foreign Country X war disability pension is exempt under section 53-10 of the ITAA 1997.

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