Private ruling: Assessability of Australian pension
Date of advice: 23 December 2015
Published: March 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2015

Ruling: Question and answer | Will the pension you receive be assessable in Australia? | No.

Relevant facts and circumstances: You were a resident of Australia and were a member of your Australian employer's superannuation scheme. You emigrated from Australia to country X and became a resident of country X for tax purposes. You will shortly become eligible for an Australian superannuation pension.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(3) | International Tax Agreements Act 1953

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 from all Australian sources during an income year. However, in determining liability to tax on the Australian source income of a foreign resident, it is necessary to consider not only the domestic income tax laws but also any applicable double tax agreement. Section 4 of the International Tax Agreements Act 1953 (Agreements Act) incorporates that Act with the Income Tax Assessment Act 1936 (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 The double tax agreement between Australia and country X is listed in the Agreements Act and operates to avoid the double taxation of income received by residents of Australia and country X. An article of the agreement with country X deals with pensions and annuities and provides that pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State. Therefore, as you are a resident of country X, Australia will have no taxing rights to your pension and it will only be taxable in country X.