Private ruling: Pension income
Date of advice: 6 May 2024
Published: 17 June 2024
Ruling period: Year ended 30 June 20YY | Year ended 30 June 20YY | Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Is your Country Z military pension assessable in Australia? | A1: No. Based on the information provided to the Commissioner your Country Z military pension is not assessable in Australia. Article 18(1) of theCountry Z Double Tax Agreement (DTA) states: Subject to the provisions of Article 19 (Governmental Remuneration), pensions and other similar remuneration paid to an individual who is a resident of one of the Contracting States in consideration of past employment shall be taxable only in that State. Article 19 of the Country Z DTA deals with government remuneration and provides that wages, salaries and similar remuneration, including pensions, paid from funds of one of the Contracting States of a state or other political subdivision thereof or of an agency or authority of any of the foregoing for labor or personal services performed as an employee of any of the above in the discharge of governmental functions to a citizen of that State shall be exempt from tax in the other Contracting State. As you are receiving a military pension, and the military is a governmental function (that is, it is something generally undertaken by government), Article 18(1) of the Country Z Agreement refers us to Article 19 of the Country Z Agreement. Article 19 of Country Z Agreement states that Country Z military pensions are exempt from tax in Australia if you are a Country Z citizen. Consequently, the Country Z military pension is not included in your assessable income in Australia and is therefore not assessable in Australia.

Relevant facts and circumstances: You are a citizen of Country Z. You obtained citizenship in Australia several years ago. You are a resident of Country Z for taxation purposes. You are a resident of Australia for taxation purposes. You receive a military pension from Country Z for your service in Country Z armed forces. Country Z withhold federal income tax from your pension.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-15 | Income Tax Assessment Act 1997 section 6-20