Private ruling: Taxation of foreign pension
Date of advice: 12 September 2025
Published: 10 November 2025
Ruling period: Year ended DD MM YY | Year ended DD MM YY | Year ending DD MM YY
Date scheme commenced: DD MM YY

Ruling: Q1: Is the social security arrears amount you received from the foreign country included in your assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) ? | A1: No Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. However, Article X of the double tax agreement with the foreign country provides that social security payments made by the foreign country to a resident of Australia are only taxable in the foreign country . The arrears amount you received was a back payment of the regular social security payments you are entitled to. Accordingly, the arrears amount is not included in your assessable income under section 6-5 of the ITAA 1997.

Relevant facts and circumstances: You are a resident of Australia. On DD MM YY you moved to Australia from the foreign country . Just before you're XX birthday you retired and began receiving the Australian Aged Pension. Once you became eligible for the social security benefits from the foreign country you were required to make an application for these benefits in order to continue to receive the Aged Pension. You made this application approximately X years ago. On DD MM YY you received a large payment into your bank account. You then received a letter, dated DD MM YY, from the foreign country pension a dministration advising you were entitled to monthly retirement benefits beginning MM YY. The payment you received was a back payment of benefits from MM YY to MM YY. Tax was withheld from this payment in the foreign country.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | International Tax Agreements Act 1953 Section 5