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Edited version of your written advice
Authorisation Number: 1012985666411
Date of advice: 17 March 2016
Ruling
Subject: Income - Foreign disability pension
Questions and answers
Is the disability support pension that you receive from County X assessable in Australia?
Yes.
This ruling applies for the following period
1 July 2014 to 30 June 2015
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are an Australian resident for taxation purposes.
You are a recipient of a Centrelink Disability Pension which is tax exempt.
Centrelink International Services arranged for you to receive overseas social security payments from County X.
You are now in receipt of a foreign disability pension of around $xx.xx per month.
Tax has not been deducted from the foreign disability pension.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 6-5(2)
International Tax Agreements Act 1953 Section 4
International Tax Agreements Act 1953 Schedule 15, Article 18
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes the ordinary income derived from all sources, whether in or out of Australia, during the income year.
A pension is ordinary income and therefore assessable for the purposes of subsection 6-5(2) of the ITAA 1997.
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 Income Tax Assessment Act 1936 (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).
Country X pensions
Schedule Y to the Agreements Act contains the treaty between Australia and Country X.
An Article of the Australian/Country X Agreement provides that any pension, including government pensions, may be taxed only by the country of residence of the recipient.
Application to your circumstances
You are an Australian resident for income tax purposes; therefore, the pension received by you is assessable only in Australia and forms part of your assessable income under section 6-5 of the ITAA 1997.