Private ruling: Australian pension
Date of advice: 8 February 2017
Published: July 2017
Ruling period: Year ending 30 June 20BB | Year ending 30 June 20CC | Year ending 30 June 20DD
Date scheme commenced: 1 July 20AA

Ruling: Q1: Is your Australian pension assessable to you while you are a foreign resident? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | International Tax Agreements Act 1953 Schedule 4 Article 19

Reasons for decision: Summary: Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a foreign resident includes the ordinary income derived directly or indirectly from all Australian sources during the income year. In determining liability to 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 contained in the International Tax Agreements Act 1953 (the Agreements Act). Schedule 4 to the Agreements Act contains the tax treaty between Australia and Country Y (the Country Y Agreement). The Country Y Agreement operates to avoid the double taxation of income received by Australian and Country Y residents. Subsection 4(1) of the Agreements Act provides that the Agreements Act incorporates the ITAA 1997 and those Acts are read as one. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited situations that are not relevant in the present case). Article XX of the Country Y Agreement provides that pensions (including government pensions) and annuities paid to a resident of Country Y are taxable only in Country Y. As you are a resident of Country Y, your Australian sourced pension income is taxable only in Country Y. Therefore, your Australian pension does not form part of your assessable income and you are not liable to pay tax on your pension in Australia.

You are over 60 years of age. | You receive Australian pension income. | You are a foreign resident for tax purposes.