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Edited version of private ruling
Authorisation Number: 1011723398268
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Ruling
Subject: Assessability of overseas pension
Question:
Is the Country A Government pension you are receiving assessable income in Australia?
Answer: Yes.
This ruling applies for the following periods:
Year ending 30 June 2011.
The scheme commenced on:
1July 2009.
Relevant facts
You are an Australian resident for income tax purposes.
You are receiving a Country A Government pension.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 27H
Income Tax Assessment Act 1997 Subsection 6-5(2)
Income Tax Assessment Act 1997 Section 6-10
Income Tax Assessment Act 1997 Subsection 6-10(4)
Income Tax Assessment Act 1997 Section 10-5
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Section 6-10 of the ITAA 1997 provides that a taxpayer's assessable income includes statutory income amounts that are not ordinary income but are included in assessable income by another provision. The assessable income of an Australian resident includes statutory income from all sources, whether in or out of Australia (subsection 6-10(4) of the ITAA 1997).
Section 10-5 of the ITAA 1997 lists the provisions about assessable income. The listed provisions include amounts in assessable income that are not ordinary income or which vary or replace the rules that would otherwise apply for certain kinds of ordinary income.
Included in this list is section 27H of the Income Tax Assessment Act 1936 (ITAA 1936) which provides that annuities and pensions paid from a foreign superannuation fund or foreign pension scheme to provide superannuation benefits are included in assessable income.
In determining liability to Australian tax, it is necessary to consider not only the income tax laws, but also 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 ITAA 1997 so that the Acts are read as one.
A particular Schedule to the Agreements Act contains the tax treaty between Australia and Country A.
A particular Article of the Country A Convention provides that pensions paid to a resident of Australia shall be taxable only in Australia. Therefore, the Country A Government pension received by you from Country A is assessable income only in Australia.