Private ruling: Foreign pension - governmental remuneration
Date of advice: 8 July 2022
Published: October 2022
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is your foreign government pension assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. However, if an amount is exempt income it is not included in the assessable income of a taxpayer (section 6-15 of the ITAA 1997). 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 relevant agreement states that wages, salaries and similar remuneration, including pensions, paid for labour or personal services performed as an employee in the discharge of governmental functions of the foreign country shall be exempt from tax in Australia. The pension you receive is not assessable in Australia under section 6-5 of the ITAA 1997.

Relevant facts and circumstances: You are an Australian resident for tax purposes. You are a citizen of a foreign country. You receive a foreign government pension. The pension is paid in relation to your former employment with the government of the foreign country.

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 Section 6-15 | International Tax Agreements Act 1953 Section 4