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Ruling

Subject: Australian superannuation pension

Question

Is the Australian superannuation pension you receive from a superannuation fund assessable in Australia?

Answer

No.

This ruling applies for the following periods:

Year ending 30 June 2013

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

The scheme commences on:

1 July 2004

Relevant facts and circumstances

You left Australia to settle in Country A and you do not intend to return to Australia.

You became a foreign resident of Australia for tax purposes from the day you left Australia.

You are in receipt of a superannuation pension from Australia. You will continue to receive this pension indefinitely.

This pension is the only income you derive from Australia.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 27H

Income Tax Assessment Act 1997 Subsection 6-5(3)

Income Tax Assessment Act 1997 Subsection 6-10(5)

Income Tax Assessment Act 1997 Section 10-5

International Tax Agreements Act 1953

Reasons for decision

Subsection 6-5 (3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that ordinary income derived by a foreign resident directly or indirectly from Australian sources, as well as other ordinary income included by a provision on a basis other than having an Australian source, is assessable. Statutory income from all Australian sources, or included by a provision on a basis other than having an Australian source, is also included in a foreign resident's assessable income under subsection 6-10(5) of the ITAA 1997.

Section 10-5 of the ITAA 1997 lists those provisions about assessable income. Included in this list is section 27H of the Income Tax Assessment Act 1936 (ITAA 1936) which provides that annuities and superannuation pensions are included in assessable income.

In determining liability to Australian tax on Australian sourced income received by a foreign resident 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).

Australia has a tax treaty with Country A. It operates to avoid the double taxation of income received by residents of Australian and Country A residents.

One of the Articles of the Country A Convention deals with pensions and annuities. Paragraph (1) of that Article provides that an Australian sourced pension paid to an individual who is a resident of Country A shall be exempt from tax in Australia.

Section 4 of the Agreements Act incorporates that Act with the ITAA 1936 and ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1936 and the ITAA 1997 where there are inconsistent provisions (except for some limited provisions).

In your case, you ceased to be a resident of Australia for tax purposes from the date you left Australia and became a resident of Country A. Accordingly your Australian sourced superannuation pension ceased to be assessable in Australia from that date. All payments of the pension you receive from then on are assessable in Country A only and this situation will remain so whilst you continue to be a resident of Country A for tax purposes.