Private ruling: Assessability of a foreign pension
Published: May 2015
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Question and Answer | Is the pension you receive from a foreign country assessable in Australia? | Yes.

Relevant facts and circumstances: You are a resident of Australia for Australian tax purposes. You receive a benefit from a foreign country. You have been in receipt of this benefit for many years. You moved to Australia from a foreign country.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5 | International Tax Agreements Act 1953 Section 4 | Taxation Administration Act 1953 section 14ZW

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) states that, for a resident of Australia, your assessable income includes income from ordinary concepts derived from all sources whether in or out of Australia. The benefit you receive from a foreign country is ordinary income and so is assessable under section 6-5 of the ITAA 1997. In determining liability to Australian tax on foreign sourced income received by a resident, it is necessary to consider not only the domestic income tax laws but also any applicable tax agreement. In your case, this is the double tax agreement between Australia and a foreign country (a foreign country Agreement). A foreign country Agreement operates to avoid the double taxation of income received by Australian and a foreign country. Article X of a foreign country Agreement states: that pensions, annuities and similar benefits paid to an Australian resident are taxable only in Australia. Therefore, your foreign benefit is taxable in Australia. There is no provision in the ITAA 1997 that exempts foreign country benefits or payments from tax in Australia.