Private ruling: Assessability of Commonwealth superannuation pension
Date of advice: 3 November 2015
Published: November 2015
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018 | Year ended 30 June 2019
Date scheme commenced: 1 July 2015

Ruling: Questions and Answers: | Is your Australian Government pension assessable in Australia? | Yes.

Relevant facts and circumstances: You are an Australian citizen. You moved to Country Z and became a resident of Country Z for income tax purposes a number of years ago. You have been paying taxes in Country Z. You are not a resident of Australia for income tax purposes. Prior to leaving Australia you worked for the Australian Commonwealth Government. While working for the Australian Commonwealth Government you became a member of an Australian Government superannuation scheme. Shortly you will begin to draw a pension from your Australian Government superannuation scheme. Your pension will be assessable in Country Z.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(3) | International Tax Agreements Act 1953 Article 18(3)

Reasons for decision: Detailed Reasoning - Assessable income: Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that ordinary income derived by a non-resident directly or indirectly from Australian sources is assessable in Australia. A pension is ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997. In your case, you will be in receipt of an Australian Government superannuation pension. This pension is income according to ordinary concepts and therefore assessable under subsection 6-5(3) of the ITAA 1997. | Detailed Reasoning - Double Tax Agreements (DTA): 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. The Country Z Agreement is listed in section 5 of the Agreements Act. The Country Z Agreement is located on the Austlii website (www.austlii.edu.au) in the Australian Treaties Series database. The Country Z Agreement operates to avoid the double taxation of income received by residents of Australia and Country Z. | Detailed Reasoning - Pensions and annuities: Article 18(1) of the Country Z Agreement advises that pensions and annuities paid to a resident of Country Z is only taxable in Country Z. However, Article 18(3) of the Country Z Agreement advises that pensions paid by Australia or a political sub-division or local authority of Australia to any individual in respect of services rendered to an Australian political sub-division or local authority, may be taxed in Australia if the recipient is an Australian citizen. In your case, you will be in receipt of a pension paid by an Australian Government superannuation scheme for services rendered to an Australian Government entity. Although you are not a resident of Australia for income tax purposes you are an Australian citizen; consequently Article 18(3) of the Country Z Agreement operates to render this pension assessable in Australia. Accordingly, the pension that you will receive from the Australian Government superannuation scheme is assessable in Australia under subsection 6-5(3) of the ITAA 1997. | Detailed Reasoning - Further information: Where a taxpayer's income is assessable in both Australia and Country Z Article 23 of the Country Z Agreement provides relief from double taxation.