ATO ID 2003/1095: Assessability of Irish pension received by an Australian resident
Date of decision: 18 November 2003
Year of income: Year ended 30 June 2003 Year ended 30 June 2004 Year ended 30 June 2005 Year ended 30 June 2006 Year ended 30 June 2007
Business line: Public Groups and International

Issue
Is a pension received from the Republic of Ireland (Ireland) by a resident taxpayer assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
Yes. A pension received from Ireland by an Australian resident taxpayer is assessable under subsection 6-5(2) of the ITAA 1997.

Facts
The taxpayer is a citizen of Ireland. The taxpayer is a resident of Australia for Australian tax purposes and for the purposes of the double tax agreement between Australia and Ireland contained in Schedule 20 to the International Tax Agreements Act 1953 (the Agreements Act). The taxpayer receives a pension from Ireland.

Reasons for decision
Summary: Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Pensions are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997. In determining liability to Australian tax on foreign sourced income it is necessary to consider not only the income tax laws, but also any applicable double tax agreement contained in the Agreements Act. Section 4 of the Agreements Act incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and ITAA 1997 so that those Acts are read as one. Schedule 20 to the Agreements Act contains the double tax agreement between Australia and Ireland (the Irish Agreement). The Irish Agreement operates to avoid the double taxation of income received by Australian and Irish residents. Article 19(1) of the Irish Agreement provides that pensions and annuities paid to a resident of Australia shall be taxable only in Australia. Accordingly, as the taxpayer is a resident of Australia, the Irish pension received by the taxpayer is assessable under subsection 6-5(2) of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 subsection 6-5(2)
Subject references: Foreign pension income Double tax agreements International law Republic of Ireland Treaties