Private ruling: International Pension
Published: December 2013
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017
Date scheme commenced: 1 July 2011

Ruling: Q1: Is your country X pension assessable in Australia? | A1: No

Relevant facts and circumstances: You are a resident of Australia for income tax purposes. You held a visa and you now have another subclass of visa. You are not a citizen of Australia but possibly plan to obtain Australian citizenship in a couple of years. You are a citizen of Country X and will remain so, even if you obtain Australian citizenship. You are a retired employee of a Country X government. You receive a government pension from Country X. Your pension is paid into your country X bank account.

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

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Pension income is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997. In determining liability to Australian tax on foreign sourced income, it is relevant to consider not only the income tax laws but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (the Agreements Act). Section 4 of the Agreements Act incorporates that Act with the ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited provisions). Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. The Country X is listed in section 5 of the Agreements Act. An article of the Country X Agreement provides that any pension paid by Country X to an individual in respect of services rendered to Country X shall be taxable only in Country X. However, the article of the Country X Agreement also provides that where an individual is a resident and citizen of Australia, and if the individual is not a citizen of Country X then the pension will be taxable only in Australia. | Detailed Reasoning - In your case:: · you receive a government pension from Country X · you are a resident of Australia for tax purposes · you are not a citizen of Australia · you are a citizen of Country X Therefore, your pension will not be assessable in Australia as the Article of Country X Agreement operates to give Country X the sole taxing rights over the pension.