Private ruling: Foreign pension income
Published: January 2013
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer | Is your foreign pension income assessable in Australia? | No.

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. You are a citizen of an overseas country. You receive a pension from the overseas country. You pay tax on this pension in the overseas country.

Relevant legislative provisions: Income Tax Assessment Act 1936 | Income tax Assessment Act 1997 | International Tax Agreements Act 1953

Reasons for decision: Summary: Generally where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source. In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements. Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and the Income tax Assessment Act 1997 (ITAA 1997) so that all three Acts are read as one. The Agreements Act overrides both the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except in some limited situations). 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 overseas Agreement is listed in section 5 of the Agreements Act. The overseas agreement operates to avoid the double taxation of income received by residents of Australia and the overseas country. An article of the overseas Agreement states that overseas pensions are exempt from tax in Australia. Consequently, the overseas pension is not included in your assessable income in Australia and is therefore not assessable in Australia.

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