Private ruling: Foreign pension income - Overseas
Published: September 2011
Ruling period: Year ending 30 June 2009 | Year ending 30 June 2010
Date scheme commenced: 1 July 2008

Ruling: Q1:  | A1: Yes

Relevant facts and circumstances: You are an Australian resident for income tax purposes. You are retired and you receive a Country X government superannuation pension every four weeks. There is a tax treaty between Australia and Country X.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2) | Income Tax Assessment Act 1997 Subsection 6-5(10) | Income Tax Assessment Act 1997 Subsection 6-5(10)(4) | Income Tax Assessment Act 1997 Section 10-5 | Income Tax Assessment Act 1936 Section 27H | International Tax Agreements Act 1953

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident for income tax purposes includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. 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. In this list, section 27H of the Income Tax Assessment Act 1936 (ITAA 1936) provides that annuities and pensions paid from a foreign superannuation fund or foreign scheme fro the payment of superannuation benefits are included in assessable income. In determining liability to tax on foreign-sourced income received by an Australian resident it is necessary to consider not only the income tax laws but also any applicable tax treaty contained in the International Tax Agreements Act 1953 (Agreements Act). Section 4 of the Agreements Act incorporates that Act with ITAA 1936 and ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except for some limited provisions). Australia has a tax treaty with Country X (Country X Agreement) which operates to avoid the double taxation of income received by Australian and Country X residents. In your case, it is necessary to establish how your weekly pension payments are categorised for the purposes of the tax treaty. Country X Agreement provides that pensions (including government pensions) and annuities sourced in Country X and paid to an Australian resident are taxable only in Australia. Consequently, your weekly pension payments from Country X are considered to be pensions for the purposes of the Country X Agreement and are taxable only in Australia. Therefore, the payments you receive are assessable in Australia under section 27H of the ITAA 1936.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Question 1: Are the four-weekly government pension payments you receive from Country X Government Superannuation Fund assessable and included in your income tax return? Answer