Private ruling: Taxation of foreign pension
Published: 17 November 2025
Ruling period: Year ended DD MM YY
Date scheme commenced: DD MM YY

Ruling: Q1: Is the spousal social security arrears amount you received from the United States of America (USA) to be included in your assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) ? | A1: No. Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) details that the 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. However, Article 18(2) of the USA Convention provides that social security payments made by the USA to a resident of Australia are only taxable in the USA. The arrears amount you received was back payment of the regular spousal social security payments you are entitled to. Accordingly, the arrears amount is not assessable income under section 6-5 of the ITAA 1997 as you as resident of Australia.

Relevant facts and circumstances: You are a resident of Australia. Your spouse is an American citizen who moved to Australia in MM YY. On DD MM YY you began receiving the Australian Aged Pension. Your spouse began receiving it on DD MM YY. As your spouse had retired, they became eligible for Social Security. As their spouse you are eligible to receive a reduced payment of Social Security. In MM YY you both applied for a Social Security benefit from the United States Department of Social Security. On MM YY you received an arrears payment representing back payment of XX months' worth of social security payments. Tax was withheld from this payment in the USA.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | International Tax Agreements Act 1953 section 5 United States Convention: Convention between the Government of Australia and the Government of the United States of America for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Article 18