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Edited version of your written advice
Authorisation Number: 1012765002873
Ruling
Subject: Foreign pension - Australian DTA
Question and answer:
Is the social security pension you receive from country D assessable in Australia?
No.
This ruling applies for the following periods:
Year ending 30 June 2003
Year ending 30 June 2004
Year ending 30 June 2005
Year ending 30 June 2006
Year ending 30 June 2007
Year ending 30 June 2008
Year ending 30 June 2009
Year ending 30 June 2010
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
The scheme commences on:
1 July 200X
Relevant facts and circumstances
You lived in country D for a number of years and were a citizen of country D.
During your working career you made mandated contributions to the country D social security system.
After many years, you returned to Australia to help care for your elderly parent.
From the time of your return, you became a resident of Australia for income tax purposes.
After a number of years of living in Australia, you became eligible to receive a social security pension from country D.
You have continued to receive country D social security payments.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
International Agreements Act 1953
Reasons for decision
Assessable income
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident for tax purposes includes ordinary income derived directly or indirectly from all sources during the income year.
Social security pensions are ordinary income and therefore assessable under subsection 6-5(2) of the ITAA 1997.
Double tax agreement
In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements.
Section 4 of the International Tax Agreements Act 1953 (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 ITAA 1997 where there are inconsistent provisions (except in some limited situations).
Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. The country D Agreement is listed in section 5 of the Agreements Act.
The country D agreement is located on the Austlii website (www.austlii.edu.au) in the Australian Treaties Series database. The country D agreement operates to avoid the double taxation of income received by residents of Australia and country D.
Article 18(2) of the country D Convention provides that the social security payments and other public pensions paid by country D to an individual who is a resident of Australia or a citizen of country D shall be taxable only in the country D.
Accordingly, as an Australian resident for income tax purposes, your social security pension received from country D is not assessable income in Australia under subsection 6-5(2) of the ITAA 1997.
Note
Please note that although you have requested this ruling to extend to 2019, due to changing nature of the tax law and the possibility of changes to the facts over time, the Commissioner will only provide a ruling for the current year plus three future years.