Edited version of private advice

Authorisation Number: 1052404522101

Date of advice: 06 June 2025

Ruling

Subject: International income - pension

Question 1

Are the payments you receive assessable in Australia?

Answer 1

Yes

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a resident of Australia for tax purposes.

You are a dual citizen of Country A and Australia.

You receive payments from Company A Pension Scheme in Country A as part of a standard scheme benefits pension option.

On Date one, you received a lump sum. The advice statement you received with the lump sum advised that this amount was tax free in Country A.

You receive monthly payments (the payments) equal to Amount A per annum with increases applied annually.

The payments are being made as a retirement benefit - a pension payable for life plus a lump sum of several times the annual pension.

The amounts paid are based on years of service and final pensionable salary.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-10

International Tax Agreement Act 1953

Reasons for decision

Summary

The payments you receive are assessable in Australia.

Detailed reasoning

As an Australian resident your assessable income includes ordinary and statutory income from all sources whether in or out of Australia (sections 6-5 and 6-10 of the ITAA 1997).

In determining your liability to pay tax in Australia it is also necessary to consider the operation of any applicable tax treaty contained in the International Tax Agreements Act 1953 (Agreements Act).

Section 4 of the Agreements Act incorporates that Act with the ITAA 1936 and the ITAA 1997 so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and the ITAA 1997 where there are inconsistent provisions (except in some limited situations).

The Convention between the Government of Australia and 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 DTA) operates to avoid the double taxation of Australian and Country A residents.

Article 17(1) of the DTA provides that pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State.

Article 25 of the DTA refers to non-discrimination. Article 25 states that Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirements connected therewith, which is more burdensome than the taxation and requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected.

Application to your circumstances

In your case, you receive pension payments from Country A. The payments are for your pension relating to your former employment.

As this pension income is paid to you as an Australian resident, Article 17(1) of the Agreement provides that the pension payments are taxable only in Australia.

Article 25 of the DTA is not applicable to your situation as you are being taxed based on your residency status not your nationality.

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