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This edited version has been archived due to the length of time since original publication.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.

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Edited version of your written advice

Authorisation Number: 1012997646843

Date of advice: 14 April 2016

Ruling

Subject: Lump sum payment in arrears

Question and Answer

Do you include in your assessable income a lump sum amount from a foreign pension fund which was accrued prior to you becoming an Australian resident taxpayer?

Yes

This ruling applies for the following period

Year ended 30 June 2016

The scheme commences on

1 July 2015

Relevant facts and circumstances

You originally received a lump sum amount from your foreign pension fund in 200X.

You became a resident of Australia in 20XX

You are not on a temporary resident visa.

A review of your pension entitlement, took place. The review concluded that an additional payment was due to you with an interest component.

Relevant legislative provisions

Section 6-5 of the Income Tax Assessment Act 1997

Section 4 of the International Tax Agreements Act 1953

Reasons for decision

Subsection 6-5(2) of the ITAA 1997 provides that assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. The pension income derived by the taxpayer from the overseas country is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997 in the year it was received.

In determining liability to Australian tax, it is necessary to consider not only the income tax laws, but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (Agreements Act).

Section 4 of the Agreements Act incorporates that Act with the ITAA 1936 and ITAA 1997 so that the Acts are read as one.

Article 17 of the Convention provides that pensions paid to a resident of Australia shall be taxable only in Australia. There, the lump sum pension amount you receive is included in your assessable income.