Private ruling: Assessable income
Date of advice: 2 September 2025
Published: 3 November 2025
Ruling period: Year ended 30 June 20YY
Date scheme commenced: DD MM YY

Ruling: Q1: Is the pension you receive from Country Z assessable in Australia? | A1: No.

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. You are a citizen of Country Z. You receive monthly payments from the Country Z Government. You are totally and permanently disabled.

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

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, whether in or out of Australia, during the income year. Pension income is ordinary income assessable under subsection 6-5(2) of the ITAA 1997. 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 Income Tax Assessment Act 1936 (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 agreement between Australia and Country Z operates to avoid the double taxation of income received by residents of Australia and Country Z. The relevant article of the Country Z agreement considers the tax treatment of governmental salaries, wages and other similar remunerations including pensions paid from funds of one of the Contracting States, of a state or other political subdivision thereof or of an agency or authority of any of the foregoing for labour or personal services performed as an employee of any of the above in the discharge of governmental functions to a citizen of that State shall be exempt from tax by the other Contracting State. Your Country Z pension is not assessable in Australia under Article 19 of the DTA between Australia and Country Z as you are a citizen of Country Z. Consequently, you are not required to declare the pension income in your Australian tax return.