Private ruling: Pension income
Published: March 2012
Ruling period: Year ending 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2011

Ruling: Q1: Is the superannuation pension that you will receive from the Commonwealth Government of Australia taxable in Australia? | A1: Yes.

Relevant facts and circumstances: You were employed by the Commonwealth Government of Australia for many years in a position that involved the discharge of a core, traditional governmental function. You are applying for a superannuation pension from the Commonwealth Government of Australia. You have dual citizenship with Australia and country B. You are a permanent resident of country A.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5(3) | International Tax Agreements Act 1953 Section 4

Reasons for decision: Summary: The superannuation pension you will receive from the Australian Government is considered a pension from the Australian government for services performed as an employee in the discharge of governmental functions. Therefore, this pension is taxable in Australia. | Detailed Reasoning - Detailed reasoning: Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a foreign resident includes all ordinary income derived from all Australian sources. Pension payments are ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997. In determining liability to Australian tax on Australian sourced income received by a foreign resident it is necessary to consider not only the income tax laws but also any applicable tax treaty. Tax treaties are given the force of law domestically by the International Tax Agreements Act 1953 (the Agreements Act). The Agreements Act states that where there are inconsistencies with an Act imposing Australian tax, the Agreements Act will prevail (except in relation to tax avoidance schemes). An article of the tax treaty between Australia and country A provides that wages, salaries and similar remuneration, including pensions, paid from the funds of the Australian government for labour or personal services performed as an employee in the discharge of governmental functions to an Australian citizen, shall be taxable only in Australia. In your case, you are not an Australian resident for taxation purposes. You have applied for a superannuation pension from the Commonwealth Government of Australia. This payment is considered a pension from the Australian government for services you performed as an employee in the discharge of governmental functions. As such, this pension is taxable in Australia.

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.