Private ruling: Undeducted purchase price
Date of advice: 11 May 2026
Published: 27 July 2026
Date scheme commenced: XXXX

Ruling: Q1: Are you entitled to an undeducted purchase price (UPP) deductible amount in respect of your foreign pension in accordance with section 27H of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: Yes, your part year UPP deductible amount for the XXXX income year is XXX; and your annual UPP deductible amount for the XXXX income years is XXX The scheme commenced on: XXXX

Relevant facts and circumstances: The taxpayer is a resident of Australia for income tax purposes. The taxpayer's pension is paid by a scheme maintained in a foreign country. The taxpayer has provided a letter from their pension scheme outlining their personal contributions The taxpayer's pension commenced on XXXX and is payable for life. The taxpayer currently receives X% of the pension. When the pension commenced you were X years of age. The taxpayer's pension is paid on a monthly basis.

Relevant legislative provisions: Income Tax Assessment Act 1936 former subsection 27A(1) | Income Tax Assessment Act 1936 section 27H | Income Tax Assessment Act 1936 subsection 27H(2) | Income Tax Assessment Act 1936 subsection 27H(3) | Income Tax Assessment Act 1936 subsection 27H(4) | Income Tax Assessment Act 1997 section 960-50 | Income Tax Assessment (1936 Act) Regulation 2015 section 9 | Income Tax Assessment (1997 Act) Regulations 2021 section 960-50.01 | Superannuation Industry (Supervision) Regulations 1994 schedule 1B Other references | Taxation Determination TD 2006/54 Income tax: how does a taxpayer work out the amount to be included in assessable income under section 27H of the Income Tax Assessment Act 1936 for a superannuation pension or annuity that is payable in a foreign currency? Important information to note | Income tax returns may be amended within two years from the date upon which the Commissioner gives notice of assessment. However, where assessments fall outside this period, you will need to lodge an objection and request an extension of time to lodge the objection. | The UPP deductible amount can only be included in your tax return if you have declared your pension income. When including these amounts, they should be translated to Australian currency using the same exchange rate. For more information about exchange rates go to our websiteato.gov.au and enter 'QC 16583' in the search box on the top right of the page.

Reasons for decision: Summary: Are you entitled to an undeducted purchase price (UPP) deductible amount in respect of your foreign pension in accordance with section 27H of the Income Tax Assessment Act 1936 (ITAA 1936)? | Detailed Reasoning - Summary:: Yes, your part year UPP deductible amount for the XXXX income year is XXX; and your annual UPP deductible amount for the XXXX income years is XXX Please note that the UPP deductible amount for the subsequent full financial years will remain the same provided the details relating to the UPP determination remain unchanged | Detailed Reasoning - Detailed reasoning: The part of your annual pension or annuity income which represents a return to you of your personal contributions is free from tax. The tax-free portion is called the UPP deductible amount. The definition of purchase price is contained in subsection 27H(4) of the Income Tax Assessment Act 1936 . It states that 'purchase price' includes the contributions made by a person to any foreign superannuation fund to obtain a pension and so much of contributions considered reasonable by the Commissioner as having been paid by a person to a foreign superannuation fund to obtain superannuation benefits including a pension. It is calculated by dividing the UPP of your pension by either the term of the pension (if fixed), or a life expectancy factor - that applies to you or your spouse if they have a greater life expectancy - according to life expectancy statistics. The Australian life tables are published by the Australian Government Actuary, and the life expectancy is taken from when the pension first became payable. The annual UPP deductible amount is calculated using the following formula: A (B − C) ÷ D A = relevant share of the pension payable to you (if all the pension is payable to you then A = 1) B = is the amount of the UPP of the pension, which in your case is XXX C = is the residual capital value (if any), which in your case is XXX D = is the relevant number, which in your case is XXX By putting your information into the above formula, your annual UPP deductible amount is XXX | Detailed Reasoning - Part year calculation: As your pension was paid for XXX days in the XXXX income year, a pro-rated amount of XXX applies for that year. | Detailed Reasoning - Conclusion: As per the above determination, your part year UPP deductible amount for the XXXX income year is XXX Your annual UPP deductible amount for the XXXX and subsequent full income year is XXX Please note that the UPP deductible amount for the full financial year will remain the same provided the details relating to the UPP determination remain unchanged.