Private ruling: Australian pension non-resident
Date of advice: 8 June 2016
Published: July 2016
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Will your Australian superannuation pension payments be assessable in Australia once you have moved permanently to the overseas country? | A1: No

Relevant facts and circumstances: You are an Australian citizen. You are currently an Australian resident for income tax purposes. You receive an Australian pension from a superannuation fund which is being taxed on taxable components. You are not a contributing member of the fund. You are not currently employed and receive no income from employment. You have no property or business ties in Australia. Your intention is to move to the overseas country within a period of time. You anticipate you will become a non-resident of Australia for income tax purposes once you have moved to the overseas country. You do not have a current intention of permanently moving back to Australia to re-establish your Australian residency once you have moved to the overseas country. You have no intention to work or to receive any income from any source in the overseas country. You anticipate your only income source will be your pension from Australia.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 6-5(3) | Income Tax Assessment Act 1997 subsection 6-10(5) | Income Tax Assessment Act 1997 section 10-5 | International Tax Agreement Act 1953

Reasons for decision: Summary: Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that ordinary income derived by a foreign resident directly or indirectly from Australian sources, is assessable income. Statutory income from all Australian sources, or included by a provision on a basis other than having an Australian source, is also included in a foreign resident's assessable income under subsection 6-10(5) of the ITAA 1997. Section 10-5 of the ITAA 1997 lists those provisions about assessable income. Included in this list is Division 302 of the ITAA 1997 which provides that certain superannuation benefits are included in assessable income. 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 double tax agreement contained in the Agreements Act. Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the ITAA 1936 and the 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). A schedule of the Agreements Act contains the tax treaty between Australia and the overseas country (the Agreement). The Agreement operates to avoid the double taxation of income received by Australian residents and the overseas country residents. The Agreement is located on the Austlii website (http://www.austlii.edu.au/) in the Australian Treaties Series database. An article of the Agreement deals with pensions (including government pensions) and annuities. The article provides that an Australian sourced pension paid to an individual who is a resident of the overseas country shall be taxable only in the overseas country. Therefore this pension is exempt from tax in Australia. Since you will be a resident of the overseas country, the Australian superannuation pension or benefits paid to you will not be assessable to you under subsections 6-5 and 6-10(5) of the ITAA 1997).