Private ruling: Assessability of your Country Y pension
Date of advice: 2 February 2016
Published: March 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Question and answer: | Is the pension that you receive assessable in Australia? | Yes.

Relevant facts and circumstances: You were born in Country Y and are a citizen of Country Y. You moved to Australia and became a resident of Australia for income tax purposes. You are in receipt of a Country Y pension. The pension is a portable Country Y government superannuation payment that is not taxed in Country Y.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6-5(2)

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Pensions and annuities are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997. Accordingly, as you are an Australian resident for income tax purposes the Country Y pension that you receive is assessable in Australia under subsection 6-5(2) of ITAA 1997. | Detailed Reasoning - Double tax agreement: In determining your liability to pay tax in Australia it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreements. 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). Section 5 of the Agreements Act states that, subject to the provisions of the Agreements Act, any provision in an Agreement listed in section 5 has the force of law. Country Y Agreement is listed in section 5 of the Agreements Act. The Country Y agreement is located on the Austlii website (www.austlii.edu.au) in the Australian Treaties Series database. The Country Y agreement operates to avoid the double taxation of income received by residents of Australia and Country Y. Article XX of the Country Y agreement advises that pensions (including government pensions) and other similar periodic remuneration paid to a resident of Australia shall be taxable only in Australia. However, such income arising from Country Y (other than payments of portable Country Y superannuation or portable veteran's pension or equivalent portable payments arising in Country Y) shall not be taxed in Australia to the extent that such income would not be subject to tax in Country Y if the recipient were a resident of Country Y. In your case, as you are a resident of Australia for income tax purposes and the payment that you receive is a portable Country Y superannuation payment it is assessable only in Australia under Article XX of the Country Y double tax agreement. Accordingly, the pension that you are in receipt of is assessable in Australia under subsection 6-5(2) of the ITAA 1997.