Private ruling: Income Tax - Governmental remuneration - Pension
Date of advice: 31 March 2016
Published: May 2016
Ruling period: Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018 | Year ended 30 June 2019 | Year ended 30 June 2020
Date scheme commenced: 1 July 2014

Ruling: Question and Answer | Is your foreign government pension assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | No

Relevant facts and circumstances: You are a foreign citizen. You are in receipt of a foreign Government pension. You intend to reside in Australia from here onward. You are an Australian tax resident.

Relevant legislative provisions: Section 6-5 Income Tax Assessment Act 1997

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. However, if an amount is exempt income it is not included in the assessable income of a taxpayer (section 6-15 of the ITAA 1997). Agreements that Australia has with various countries under the International Tax Agreements Act 1953 (the Agreements Act) operates to prevent the double taxation of income. Section 4 of the Agreements Act incorporates that Act with the ITAA 1997 so that both Acts are read as one. The Agreements Act effectively overrides the ITAA 1997 where there are inconsistent provisions (except for some limited provisions). The relevant agreement states that wages, salaries and similar remuneration, including pensions, paid for labour or personal services performed as an employee in the discharge of governmental functions of the foreign country shall be exempt from tax in Australia. The pension you receive is not assessable in Australia under section 6-5 of the ITAA 1997.