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Edited version of private advice
Authorisation Number: 1051824924811
Date of advice: 8 April 2021
Ruling
Subject: Pension paid to foreign resident
Question
Will the compensation payments received as a non-resident from Organisation A be assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances:
Your partner died in an accident while working for the employer.
You are now in receipt of compensation payments from Organisation A. The payments are assessed annually and began in the 20XX financial year when you were a resident of Australia.
You returned to live in Country A and became a resident of Country A.
You are not a resident of Australia for tax purposes.
Relevant legislative provisions:
Income Tax Assessment Act 1997, section 6-5
Convention between the Government of Australia and the Government of Country A for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains (The Country A Convention)
Reasons for decision
You moved to live in Country A and hence are no longer a resident of Australia. You are now a resident of Country A.
Taxation Determination TD 93/151 Income tax: are periodic workers' compensation payments made by Comcare, 'pensions' for purposes of the pensions articles in Australia's double taxation agreements (DTAs)? considers that Comcare payments are fixed periodical payments that are pensions within the meaning of that term.
Therefore, such pensions fall within the pension articles for the purposes of Australia's double taxation agreements, including the double tax agreement with Country A, termed the Country A Convention.
The Convention states at Article XX that pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State.
As you are now a resident of the Country A, and as this income is defined as a pension, it falls within the above pension article of the Country A Convention. Therefore, as you are a resident of the Country A, it will be taxable in that country only.
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