Private ruling: Double tax agreement - foreign pension
Date of advice: 1 April 2026
Published: 15 June 2026
Ruling period: Year ended 30 June 20YY | Year ended 30 June 20YY | Year ended 30 June 20YY | Year ending 30 June 20YY | Year ending 30 June 20YY | Year ending 30 June 20YY | Year ending 30 June 20YY | Year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Is the Country X pension that is paid to you assessable 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 income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. Agreements that Australia has with various countries under the International Tax Agreements Act 1953 (the Agreements Act) operates to prevent the double taxation of income. Section 4 of the Agreements Act incorporates that Act with the ITAA 1997 so that both Acts are read as one. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited provisions). The Country X Agreement operates to avoid the double taxation of income received by residents of Australia and Country X. The Country X Agreement states at Article XX: Subject to the provisions of paragraph (2) of Article XX, pensions paid to a resident of a Contracting State in consideration of past employment, and payments made to a resident of that State under the social security system of the other Contracting State, shall be taxable only in the first-mentioned State. Paragraph X of Article XX states: (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or local authority of that State to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State. (b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a citizen or national of, that other State. In your case, the pension you receive from Country X is paid in respect of government service. As you are not an Australian citizen or national, Article XX of the Country X Agreement applies. Under this Article, the pension is not assessable in Australia.

Relevant facts and circumstances: You are an Australian resident for tax purposes. You are not an Australian citizen. You were employed in a government position in Country X. You served in this role from DD MM 20YY. On DD MM 20YY, you retired. You received a Country X pension during the ruling period. The pension is not taxable in Country X. The pension payments are made monthly into your bank account. The pension payments will be ongoing.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 subsection 6-5(2) | Income Tax Assessment Act 1997 subsection 6-15 | International Agreements Act 1953