Private ruling: Request for a determination of the deductible amount of UPP.
Date of advice: 26 June 2015
Published: June 2015
Ruling period: 2013-14 financial year | 2014-15 financial year
Date scheme commenced: On or after 1 July 1983

Ruling: Q1: Are you entitled to a deductible amount in respect of your foreign pension? | A1: Yes, your annual deductible amount and your part year deductible amount has been determined in accordance with subsection 27(2) of the Income Tax Assessment Act 1936 (ITAA 1936).

Relevant facts and circumstances: This ruling is based on the facts stated below. Any material variation from these facts (including any matters not stated in the description above and any departure from these facts) will mean that the ruling will have no effect. Where there is no variation, the ruling can apply for more than just the period/s mentioned above. You are resident of Australia for income tax purposes You currently receive 100% of the pension. The pension is non reversionary. The residual capital value of the pension is nil. Your pension is paid on a monthly basis. Assumptions No assumptions have been used in this ruling as it is given on the basis of the facts and circumstances stated above.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 27H | Income Tax Assessment Act 1936 Subsection 27H(2) | Income Tax Assessment Act 1936 Subsection 27H(3) | Income Tax Assessment Act 1936 Subsection 27H(4) | Income Tax Assessment Act 1997 Section 960-50 - currency translation | Income Tax Regulations 1936 Regulation 9 | Income Tax Assessment Regulations 1997 Regulation 960-50.01 - currency translation Important information to note | For the 2004-05 and later financial years, income tax returns may be amended within two years from the date upon which the Commissioner gives notice of assessment. However, where assessments fall outside this period, you will need to lodge an objection and request an extension of time to lodge the objection. | The deductible amount can only be included in your tax return if you have declared your pension income. When including these amounts, they should be translated to Australian currency using the same exchange rate. More information about exchange rates is available from our website by entering 'QC 16583' in the search box on the top right of the page.

Reasons for decision: Summary: The part of your annual pension or annuity income which represents a return to you of your personal contributions is free from tax. The tax-free portion is called the deductible amount. It is calculated by dividing the UPP of your pension by either the term of the pension (if fixed), or a life expectancy factor - that applies to you or your spouse if they have a greater life expectancy - according to life expectancy statistics. | Detailed Reasoning - Apportioning contributions where both a lump sum and pension is paid: The amount of personal contributions towards the purchase price of your pension has been determined. The Australian life tables are published by the Australian Government Actuary, and the life expectancy is taken from when the pension first became payable. The annual deductible amount is calculated using the following formula: A (B - C) D A = relevant share of the pension payable to you B = is the amount of the UPP of the pension C = is the residual capital value (if any) D = is the relevant number The factors for determining the life expectancy are: 1. the date when the pension first became payable, and 2. your age when the pension commenced By putting your information into the above formula, your annual deductible amount is obtained. | Detailed Reasoning - Part year calculation: As your pension was paid for part of the financial year, a pro-rated amount applies. | Detailed Reasoning - This ruling applies for the following period:: 2013-14 financial year 2014-15 financial year | Detailed Reasoning - The scheme commenced on:: On or after 1 July 1983 | Detailed Reasoning - Relevant facts and circumstances: This ruling is based on the facts stated below. Any material variation from these facts (including any matters not stated in the description above and any departure from these facts) will mean that the ruling will have no effect. Where there is no variation, the ruling can apply for more than just the period/s mentioned above. You are resident of Australia for income tax purposes You currently receive 100% of the pension. The pension is non reversionary. The residual capital value of the pension is nil. Your pension is paid on a monthly basis. | Detailed Reasoning - Assumptions: No assumptions have been used in this ruling as it is given on the basis of the facts and circumstances stated above. | Detailed Reasoning - Relevant legislative provisions: Income Tax Assessment Act 1936 Section 27H Income Tax Assessment Act 1936 Subsection 27H(2) Income Tax Assessment Act 1936 Subsection 27H(3) Income Tax Assessment Act 1936 Subsection 27H(4) Income Tax Assessment Act 1997 Section 960-50 - currency translation Income Tax Regulations 1936 Regulation 9 Income Tax Assessment Regulations 1997 Regulation 960-50.01 - currency translation | Detailed Reasoning - Important information to note: For the 2004-05 and later financial years, income tax returns may be amended within two years from the date upon which the Commissioner gives notice of assessment. However, where assessments fall outside this period, you will need to lodge an objection and request an extension of time to lodge the objection. The deductible amount can only be included in your tax return if you have declared your pension income. When including these amounts, they should be translated to Australian currency using the same exchange rate. More information about exchange rates is available from our website by entering 'QC 16583' in the search box on the top right of the page.