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Edited version of your written advice
Authorisation Number: 1012972917132
Date of advice: 19 February 2016
Ruling
Subject: Assessability of foreign pension
Question and answer:
Is your foreign pension included in your assessable income in Australia?
No.
This ruling applies for the following period:
1 July 20XX to 30 June 2018.
The scheme commenced on:
1 July 20XX.
Relevant facts and circumstances:
You are a citizen of Country A.
You receive a pension from Country A for services provided to Country A.
You reside in Australia.
You are not an Australian citizen.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Generally, income in the form of a pension is included in the assessable income of an Australian resident taxpayer under the provisions of section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997).
However, when an Australian resident taxpayer is receiving a foreign pension, the provisions of any double taxation agreement between Australia and the relevant foreign country must be considered to determine which country has taxing rights over the foreign pension.
Australia has a double taxation agreement with Country A (the DTA).
The DTA provides that any pension paid by Country A to an individual in respect of services rendered to Country A shall be taxable only in Country A, unless the recipient is a resident and citizen of Australia and is not a citizen of Country A, in which case the pension is only taxable in Australia.
You receive a pension from Country A for services provided to Country A. In addition, you are a citizen of Country A, you reside in Australia but you are not an Australian citizen. Accordingly, the DTA operates to provide Country A with sole taxing rights over your foreign pension and you are not required to include that pension in your assessable income in Australia.