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Edited version of private advice
Authorisation Number: 1052413553998
Date of advice: 26 June 2025
Ruling
Subject: Foreign pension income
Question 1
Is the Country Z pension you receive taxable in Australia?
Answer 1
Yes.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You have been a resident of Australia for taxation purposes for several years.
You receive a percentage of a Country Z pension.
You paid tax on the pension in Country Z.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 27H
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 6-10
Reasons for decision
Sections 6-5 and 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provide that the assessable income of an Australian resident includes their ordinary and statutory income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Foreign superannuation pensions and annuities are included in assessable income under section 27H of the Income Tax Assessment Act 1936 (ITAA 1936).
In determining the liability of an Australian resident to Australian tax on foreign sourced income, it is necessary to consider not only the Australian tax laws but also any applicable tax treaty.
Tax treaties are given the force of law domestically by the International Tax Agreements Act 1953 (the Agreements Act).
The Agreements Act states that where there are inconsistencies with an Act imposing Australian tax, the Agreements Act will prevail (except in relation to tax avoidance schemes).
Australia has signed a tax treaty with Country Z.
The Country Z convention provides that pensions (including government pensions) and annuities paid to a resident of Australia shall be taxable only in Australia.
Accordingly, as you are a resident of Australia for tax purposes, the pension that you receive from Country Z is required to be included in your assessable income.
If you have paid tax in Country Z on the pension, you should contact the Country Z tax authorities and request a refund of that tax. You should also inform the payer of your Country Z pension that you are an Australian resident and to discontinue deducting tax on future payments.
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