Private ruling: Double tax agreement (DTA)
Date of advice: 22 January 2026
Published: 16 March 2026
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: XX XXXX 20XX

Ruling: Q1: Is the income you derive from your foreign sourced pension assessable income in Australia? | A1: Yes.

Relevant facts and circumstances: You were born in Country A. While living in Country A you contributed to the standard Country A statutory pension scheme throughout your Country A employment. For a period, you worked in Country A and contributed to the pension. The contributions received preferential tax treatment under Country A law in three ways: Employer contributions: your employer contributed to your pension, which were not treated as taxable income. Government subsidies: The Country A government contributed directly to your pension scheme. Employee contributions: your own contributions were tax-deductible from your gross income. Payments were not made to your foreign pension for a government service. On XX XXXX 20XX, you travelled to Australia. Since arriving in Australia, you have not contributed to your Country A pension. Since XXXX 20XX, you permanently settled in Australia and became an Australian tax resident. Upon permanently relocating to Australia, you were no longer considered a Country A tax resident. You are not an Australian citizen. On XX XXXX 20XX, you retired. In XXXX 20XX, you started to receive your Country A pension monthly.

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

Reasons for decision: Summary: Your Country A pension income is assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997). As you are solely a tax resident of Australia under the Australia-Country A Double Taxation Agreement (DTA), Australia is allocated with taxing rights over your foreign pension income by paragraph 1 of Article 17. Country A may also have taxing rights to the pension income under paragraph 3 of Article 17, but it is outside the scope of the consideration of this ruling decision. | Detailed Reasoning - Detailed reasoning: Subsection 6-5(1) of the Income Tax Assessment 1997 (ITAA 1997) provides that assessable income includes 'income according to ordinary concepts', which is called ordinary income. Subsection 6-5(2) of the ITAA 1997 states that the assessable income of an Australian resident includes income derived directly or indirectly from all sources, whether in or out of Australia, during the income year, unless that income is exempt income or otherwise not assessable income. Section 6-10 of the ITAA 1997 provides that a taxpayer's assessable income includes statutory income amounts that are not ordinary income but are included in assessable income by another provision. The assessable income of an Australian resident includes statutory income from all sources, whether in or out of Australia (subsection 6-10(4) of the ITAA 1997). Section 10-5 of the ITAA 1997 lists those provisions about assessable income. Included in this list is section 27H of the Income Tax Assessment Act 1936 (ITAA 1936) which provides that annuities and superannuation pensions are included in assessable income. This section states that annuities first payable on or after 1 July 1983 are included in the assessable income of the taxpayer, excluding the undeducted purchase price if the annuity was purchased. In determining a taxpayer's liability to pay tax in Australia it is also necessary to consider the operation of any applicable tax treaty contained in the International Tax Agreements Act 1953 (Agreements Act). Sections 4 and 5 of the Agreements Act incorporate that Act with the ITAA 1936 and the ITAA 1997 and provide that the provisions of a double tax agreement have the force of law. Taxation Ruling TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreements discusses the Commissioner's views about interpreting double tax agreements. Paragraph 104 of TR 2001/13 provides that the OECD Model Tax Convention and Commentary will often need to be considered in interpreting double tax agreements. The double tax agreement (DTA) between Australia and Country A. Article 17 of the DTA deals with pensions, annuities and states: 1 Subject to the provisions of paragraph 2 of Article 18, pensions, payments made under the social security legislation and annuities paid to a resident of a Contracting State shall be taxable only in that State. ... 3 Notwithstanding the provisions of paragraphs 1 and 2, benefits paid under the social security legislation of a Contracting State may also be taxed in that State but the tax so charged shall not exceed 15 per cent of the gross amount of the benefit. However, this paragraph shall not apply if the benefits were first paid before 1 January 2017. | Detailed Reasoning - Application to your circumstances: In your case, you are an Australian resident taxpayer entitled to monthly foreign pension payments. The Commissioner considers that your pension payments will be ordinary income pursuant to subsection 6-5(1) of the ITAA 1997 as these payments have the characteristics of ordinary income. They have been earned as a result of work performed, are expected, and will be relied upon. The payments will also be received periodically. As you are solely a tax resident of Australia under the DTA, Australia is allocated with taxing rights over your foreign pension income by paragraph 1 of Article 17. Country A may also have taxing rights to the pension income under paragraph 3 of Article 17, but it is outside the scope of the consideration of this ruling decision.