Private ruling: International - foreign pension and exchange rate
Published: July 2012
Ruling period: 1 July 2012 to 30 June 2013

Ruling: Question and Answer | Is the foreign exchange rate used when calculating the applicable fund earnings under section 305-70 of the Income Tax Assessment Act 1997 the rate on the day the payment is received? | 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. In 2007 you became an Australian resident for taxation purposes. You have funds in an overseas pension scheme You are transferring the entire amount in the fund. You did not make any contributions to the fund after you became an Australian resident for taxation purposes.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 305-70 | Income Tax Assessment Act 1997 subsection 960-50(1) | Income Tax Assessment Act 1997 subsection 960-50(6)

Reasons for decision: Summary: Under subsection 960-50(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that an amount in a foreign currency is to be translated into Australian currency. Item 7 of the table in subsection 960-50(6) of the ITAA 1997 provides that: An amount of statutory income (other than an amount included in assessable income under Division 102); · if the amount is received at or before the time when the requirement first arose to include it in your assessable income - the amount is to be translated to Australian currency at the exchange rate applicable at the time of receipt; or · in any other case - the amount is to be translated to Australian currency at the exchange rate applicable at the time when the requirement first arose to include it in your assessable income. Consequently, any amounts assessable under section 305-70 of the ITAA 1997 will be calculated in the foreign currency and converted to Australian dollars in accordance with item 7 of the table in subsection 960-50(6) of the ITAA 1997, being the daily rate of exchange on the day the payment is received. Therefore, on the day you receive the lump sum payment from the overseas superannuation scheme you will use the exchange rate on that day to convert the funds into Australian currency.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.