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Edited version of your written advice
Authorisation Number: 1012991966699
Date of advice: 31 March 2016
Ruling
Subject: Income Tax - Governmental remuneration - Pension
Question and Answer
Is your foreign government pension assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
No
This ruling applies for the following periods
Year ended 30 June 2015
Year ended 30 June 2016
Year ended 30 June 2017
Year ended 30 June 2018
Year ended 30 June 2019
Year ended 30 June 2020
The scheme commences on
1 July 2014
Relevant facts and circumstances
You are a foreign citizen.
You are in receipt of a foreign Government pension.
You intend to reside in Australia from here onward.
You are an Australian tax resident.
Relevant legislative provisions
Section 6-5 Income Tax Assessment Act 1997
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 ordinary income derived directly or indirectly from all sources during the income year. However, if an amount is exempt income it is not included in the assessable income of a taxpayer (section 6-15 of the ITAA 1997).
Agreements that Australia has with various countries under the International Tax Agreements Act 1953 (the Agreements Act) operates to prevent the double taxation of income. Section 4 of the Agreements Act incorporates that Act with the ITAA 1997 so that both Acts are read as one. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited provisions).
The relevant agreement states that wages, salaries and similar remuneration, including pensions, paid for labour or personal services performed as an employee in the discharge of governmental functions of the foreign country shall be exempt from tax in Australia.
The pension you receive is not assessable in Australia under section 6-5 of the ITAA 1997.