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Edited version of your written advice
Authorisation Number: 1051204219493
Date of advice: 17 March 2017
Ruling
Subject: Country A pension
Question and answer
Is your pension received from Country A assessable in Australia?
Yes.
This ruling applies for the following periods
Year ending 30 June 2016
Year ending 30 June 2015
Year ending 30 June 2014
The scheme commenced on
1 July 2013
Relevant facts
You are an Australian resident for tax purposes.
You are in receipt of a pension which you set up when you closed your business in Country A.
Your pension is paid to you quarterly.
You pay tax on the pension in Country A.
There is a tax treaty between Australia and Country A.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
International Tax Agreements Act 1953 Schedule 1, Article 17(1)
Reasons for decision
As a resident of Australia your assessable income includes income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
In determining liability to Australian tax on foreign sourced income received by a resident, it is necessary to consider not only the income tax laws but also any applicable tax treaty contained in the International Tax Agreements Act 1953 (the Agreements Act).
Schedule # to the Agreements Act contains the tax treaty between Australia and Country A. The Convention operates to avoid the double taxation of income received by Australian and Country A residents.
Article # of the Convention provides that pensions (including government pensions) and annuities paid to a resident of Australia shall be taxable only in Australia.
In your case, the pension you receive from Country A is taxable only in Australia.
Therefore, the Country A pension received by you is included in your assessable income under section 6-5 of the ITAA 1997.
For your information
Country A does not have a taxing right under the treaty; therefore, a Foreign Income Tax Offset is not available. While we are obliged to provide relief from double taxation under the treaty under Article # - that article refers to Country A taxes paid in accordance with the convention. The foreign taxes - if paid in Country A - are not paid in accordance with the convention because the Country A does not have a taxing right. As a result, Australia is not obliged to provide relief for the double taxation.
To the extent that double tax arises - the most appropriate course of action is for a taxpayer to request a refund of those amounts from the appropriate authority in Country A.