ATO ID 2001/770: Foreign Deceased Spouse Pension - deceased Consular
Date of decision: 23 August 2001
Year of income: Year ended 30 June 1999 Year ended 30 June 2000
Business line: Small Business/Individual Taxpayers

Issue
Is the foreign deceased spouse pension received by a taxpayer assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
Yes. The foreign deceased spouse pension received by the taxpayer is assessable under section 6-5 of the ITAA 1997.

Facts
The taxpayer was born overseas and is currently an Australian resident receiving a foreign deceased spouse pension. The pension does not contain an age pension component. The taxpayer is the spouse of a deceased Consular.

Reasons for decision
Summary: Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. However, if an amount is exempt income it is not included in the assessable income of a taxpayer (section 6-15 of the ITAA 1997). The Consular Privileges & Immunities Act 1972 (CPIA) gives domestic legal effect to the agreements Australia has made as a party to the Vienna Convention on Consular Relations (the Convention). Specifically, subsection 5(1) of the CPIA gives effect to Article 49 of the Convention, which concerns the exemption of income from taxes. Subsection 5(4) of the CPIA provides that the exemption from tax on income applies for years commencing on or after 1 July 1972. Article 49 of the Convention makes reference to exemption from income tax for all consular officers and employees and members of their families forming part of their households but with the exception of tax on private income. As the taxpayer's spouse is no longer a Consular or a member of the Consular staff, the exemption will not apply to the pension of the taxpayer. Therefore, the pension income received by the taxpayer is assessable income under section 6-5 of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 section 6-5 subsection 6-5(2) section 6-15
Other references: Vienna Convention on Consular Relations Article 49
Subject references: Foreign pension Foreign pension income Diplomatic privileges and immunities