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Edited version of private advice
Authorisation Number: 1051618940932
Date of advice: 10 December 2019
Ruling
Subject: INTL - Pension
Question
Is the Country Y pension you receive assessable in Australia?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2019
The scheme commences on:
1 July2018
Relevant facts and circumstances
You are a resident of Australia for taxation purposes.
You receive a pension from Country Y.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
International Tax Agreements Act 1953
Income Tax Assessment Act 1936
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, whether in or out of Australia, during the income year.
Pension income is ordinary income assessable under 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).
Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. The country Y Agreement is listed in section 5 of the Agreements Act.
The agreement operates to avoid the double taxation of income received by residents of Australia and country Y.
Article XX of the country Y agreement provides that pensions paid to a resident of Australia shall be taxable only in Australia.
As you are a resident of Australia for taxation purposes the pension payment you receive is assessable income in Australia under subsection 6-5(2) of the ITAA 1997 and must be declared in an Australian tax return.