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Edited version of private advice
Authorisation Number: 1052310795890
Date of advice: 8 October 2024
Ruling
Subject: Assessable income
Question
Is your Country Z pension and employment related pension assessable in Australia?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2024
The scheme commenced on:
1 July 2023
Relevant facts and circumstances
You are a resident of Australia for taxation purposes.
You receive a Country Z pension.
You have received a professional pension since you retired.
The Country Z pension is paid by a third party.
You receive an employment related pension.
You have received the employment related pension since you retired.
The employment related pension is paid by another third party.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
International Tax Agreements Act 1953 section 4
International Tax Agreements Act 1953 section 5
Reasons for decision
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.
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 agreement operates to avoid the double taxation of income received by residents of Australia and Country Z.
The agreement between Australia and Country Z considers pensions and annuities. It says that pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State.
As you are a resident of Australia for taxation purposes your pensions are assessable in Australia as per the agreement with Country Z.