Private ruling: The Undeducted Purchase Price (UPP) of your foreign pension
Date of advice: 22 June 2015
Published: June 2015
Ruling period: Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: On or after 1 July 1983

Ruling: Q1: Are you entitled to a deductible amount in respect of the undeducted purchase price (UPP) of your foreign pension? Ruling Yes, your annual deductible amount has been calculated in accordance with subsection 27H of the Income Tax Assessment Act 1936 (ITAA 1936).

Relevant facts and circumstances: This ruling is based on the facts stated below. Any material variation from these facts (including any matters not stated in the description above and any departure from these facts) will mean that the ruling will have no effect. Where there is no variation, the ruling can apply for more than just the period/s mentioned above. You are resident of Australia for income tax purposes. You receive a pension from a retirement fund established and managed outside Australia. You have provided evidence from the fund to assist the Commissioner in determining the amount of your personal contributions. Your assessable income includes your pension income. Your pension became payable on or after 1 July 1983. All the pension is payable to you. Your pension is payable for life. The residual capital value of the pension is nil. Your pension is paid on a monthly basis. Assumptions No assumptions have been used in this ruling as it is given on the basis of the facts and circumstances stated above.

Relevant legislative provisions: 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 - currency translation | Income Tax Regulations 1936 Regulation 9 | Income Tax Assessment Regulations 1997 Regulation 960-50.01 Other references: | Taxation Determination TD 2006/17 | Taxation Determination TD 2006/54

Reasons for decision: Summary: 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 deductible amount. 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 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, C = is the residual capital value (if any), D = is the relevant number. | Detailed Reasoning - This ruling applies for the following period:: Year ended 30 June 2015 Year ended 30 June 2016 | Detailed Reasoning - The scheme commenced on:: On or after 1 July 1983 | Detailed Reasoning - Relevant facts and circumstances: This ruling is based on the facts stated below. Any material variation from these facts (including any matters not stated in the description above and any departure from these facts) will mean that the ruling will have no effect. Where there is no variation, the ruling can apply for more than just the period/s mentioned above. You are resident of Australia for income tax purposes. You receive a pension from a retirement fund established and managed outside Australia. You have provided evidence from the fund to assist the Commissioner in determining the amount of your personal contributions. Your assessable income includes your pension income. Your pension became payable on or after 1 July 1983. All the pension is payable to you. Your pension is payable for life. The residual capital value of the pension is nil. Your pension is paid on a monthly basis. | Detailed Reasoning - Assumptions: No assumptions have been used in this ruling as it is given on the basis of the facts and circumstances stated above. | Detailed Reasoning - Relevant legislative provisions: 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 - currency translation Income Tax Regulations 1936 Regulation 9 Income Tax Assessment Regulations 1997 Regulation 960-50.01 | Detailed Reasoning - Other references:: Taxation Determination TD 2006/17 Taxation Determination TD 2006/54