| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012083847390
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Superannuation death benefit
Question 1
Are you a resident of Australia for income tax purposes for the income years ended 30 June 2011, 30 June 2012, 30 June 2013 and 30 June 2014?
Answer
No.
Question 2
Are the Government pensions you receive while residing in a foreign country assessable in Australia pursuant to the double tax agreement between Australia and the foreign country?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commenced on
1 July 2010
Relevant facts
You are a foreign national and a resident of a foreign country (the foreign country) for income tax purposes.
You reside in the foreign country with your child.
You were not present in Australia for more than 183 days continuously or intermittently during the year ended 30 June 2011.
You will not be present in Australia for more than 183 days continuously or intermittently during each of the years ending 30 June 2012, 30 June 2013 and 30 June 2014.
You were married to an Australian citizen (your spouse).
Your spouse worked for the Australian Government until retirement.
While working for the Australian Government, your spouse was a member of two Government pension schemes.
Your spouse moved to the foreign country permanently and married you.
Your spouse lived with you in the foreign country after you married.
Your spouse passed away.
The two Australian Government pensions became payable to you following the passing of your spouse.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 6(1)
Superannuation Act 1990
Superannuation Act 1976
Income Tax Assessment Act 1997 Subsection 6-5(3)
International Tax Agreements Act 1953 Section 5A
International Tax Agreements Act 1953 Section 3AAA
Reasons for decision
Summary
You are not a resident of Australia for income tax purposes for the income years ended 30 June 2011, 30 June 2012, 30 June 2013 and 30 June 2014.
You are a foreign national and you are a resident in that foreign country for income tax purposes. The Australian pensions you receive shall be taxable only in that foreign country. Therefore, the government pensions you receive while residing in that foreign country are not assessable in Australia.
Detailed reasoning
Residency
The terms 'resident' and 'resident of Australia', in regard to an individual, are defined in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) as:
(a) a person, other than a company, who resides in Australia and includes a person -
(i) whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside Australia;
(ii) who has actually been in Australia, continuously or intermittently, during more than one-half of the year of income, unless the Commissioner is satisfied that his usual place of abode is outside Australia and that he does not intend to take up residence in Australia; or
(iii) who is:
(A) a member of the superannuation scheme established by deed under the Superannuation Act 1990; or
(B) an eligible employee for the purposes of the Superannuation Act 1976; or
(C) the spouse, or a child under 16, of a person covered by sub-subparagraph (A) or (B).
You are a foreign national and you reside in a foreign country with your child..
Applying Taxation Ruling IT 2650 to your circumstances, you do not reside in Australia as you reside in the foreign country and your domicile is not in Australia as you are a foreign national.
Your usual place of abode is in the foreign country and you do not intend to take up residence in Australia.
You were not present in Australia for more than 183 days continuously or intermittently during the year ended 30 June 2011.
You will not be present in Australia for more than 183 days continuously or intermittently during each of the years ending 30 June 2012, 30 June 2013 and 30 June 2014 respectively.
You were married to an Australian citizen (your spouse).
Your spouse worked in two Australian Government departments until retirement.
While working at the two Australian Government departments, your spouse was a member of the two Government pension schemes.
Your spouse moved to the foreign country permanently and married you.
The superannuation scheme established by deed under the Superannuation Act 1990 is the Public Sector Superannuation Scheme of which your spouse was not a member.
As your spouse retired from the Government department, your spouse ceased to be an eligible employee for the purposes of the Superannuation Act 1976.
Thus, you are not the spouse of a person covered by sub-subparagraph (A) or (B) of subsection 6(1)(a)(iii) of the ITAA 1936.
Therefore, you were not an Australian resident for income tax purposes for the income year ended 30 June 2011 and will not be a resident for the income years ending 30 June 2012, 30 June 2013 and 30 June 2014 pursuant to subsection 6(1) of the ITAA 1936.
Double tax treatment of pensions received
Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a foreign resident includes all ordinary income derived from all Australian sources.
Pension payments are ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997.
The International Tax Agreements Act 1953 (Agreements Act) overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations).
There is a double tax agreement between Australia and the foreign country (the foreign country Agreement) which operates to avoid the double taxation of income received by residents of Australia and the foreign country.
The foreign country Agreement specifically deals with the taxation of pensions. It provides that, the foreign country has the sole taxing rights over Australian pensions paid to an individual who is a resident of the foreign country.
You are a foreign national and you are a resident of the foreign country for income tax purposes.
Your spouse worked for the Australian Government until retirement.
While working for the Australian Government, your spouse was a member of two Government pension schemes.
You receive the two pensions which became payable to you following the passing of your spouse.
Accordingly, the foreign country Agreement provides that the Australian pensions you receive shall be taxable only in the foreign country.
Therefore, the two pensions you receive while residing in the foreign country are not assessable in Australia pursuant to the foreign country Agreement.