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This edited version has been archived due to the length of time since original publication.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

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of private advice

Authorisation Number: 1013034749837

Date of advice: 16 June 2016

Ruling

Subject: deductible amount of UPP of a foreign pension or annuity

Notice of private ruling

Question

Are you entitled to a deductible amount in respect of your foreign pension?

Answer

Yes

Reasons for Decision

The part of your annual pension or annuity income which represents a return to you of your personal contributions is free from tax. The tax-free portion is called the deductible amount.

It is calculated by dividing the UPP of your pension by either the term of the pension (if fixed), or a life expectancy factor - that applies to you or your spouse if they have a greater life expectancy - according to life expectancy statistics.

The Australian life tables are published by the Australian Government Actuary, and the life expectancy is taken from when the pension first became payable.

The annual deductible amount is calculated using the following formula:

[A (B-C)] / D

A = relevant share of the pension payable to you (if all the pension is payable to you then A = 1)

B = is the amount of the UPP of the pension

C = is the residual capital value (if any)

D = is the relevant number

Relevant facts and circumstances

This ruling is based on the facts stated below. Any material variation from these facts (including any matters not stated in the description above and any departure from these facts) will mean that the ruling will have no effect. Where there is no variation, the ruling can apply for more than just the period/s mentioned above.

  • You are resident of Australia for income tax purposes
  • You have provided a statement from the fund to assist the Commissioner in determining the amount of your personal contributions
  • Your pension commenced on 1 October 2014 and is payable for life

Assumptions

No assumptions have been used in this ruling as it is given on the basis of the facts and circumstances stated above.

Relevant legislative provisions

  • Income Tax Assessment Act 1936 section 27H
  • Income Tax Assessment Act 1936 subsection 27H(2)
  • Income Tax Assessment Act 1936 subsection 27H(3)

Other references:

  • Taxation Determination TD 2006/17
  • Taxation Determination TD 2006/54

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