Private ruling: Foreign pension
Published: January 2015
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Question and Answer | Is the pension you receive from a foreign country assessable in Australia? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a resident of Australia for taxation purposes. You are in receipt of a pension from a foreign country.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2) | International Agreements Act 1953

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Pensions are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997. In determining liability to Australian tax on foreign sourced income it is necessary to consider not only the income tax laws, but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (Agreements Act). 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. The agreement is listed in section 5 of the Agreements Act. The agreement is located on the Austlii website ( www.austlii.edu.au ) in the Australian Treaties Series database. The agreement operates to avoid the double taxation of income received by Australian and residents of a foreign country. Article X of the agreement provides that pensions and annuities paid to a resident of Australia shall be taxable only in Australia. Accordingly, as you are a resident of Australia for taxation purposes, the pension you receive from a foreign country is assessable in Australia under subsection 6-5(2) of the ITAA 1997 and is included in your income tax return.