Private ruling: Foreign pension or annuity
Date of advice: 26 March 2026
Published: 6 July 2026
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to an undeducted purchase price (UPP) deductible amount in respect of your foreign pension? | A1: Yes. The deductible amount has been calculated in accordance with the formula under subsection 27H(2) of the Income Tax Assessment Act 1936. This private ruling applies for the following period: Income year ending 30 June 20XX and future years.

Relevant facts and circumstances: The taxpayer is a resident of Australia for income tax purposes. The taxpayer's pension is paid by a scheme maintained in a foreign country. The taxpayer has provided a letter from their pension scheme outlining their personal contributions The taxpayer's pension commenced on XXXX and is payable for life. The taxpayer currently receives X% of the pension. When the pension commenced you were X years of age. The taxpayer's pension is paid on a monthly basis

Relevant legislative provisions: Income Tax Assessment Act 1936 section 27H | Income Tax Assessment Act 1936 subsection 27H(2) | Income Tax Assessment Act 1936 subsection 27H(4) | Income Tax Assessment (1936 Act) Regulation 2015 section 9

Reasons for decision: Summary: The part of your annual pension or annuity income which represents a return to you of your personal contributions is free from tax. The tax-free portion is called the UPP deductible amount. It is calculated by dividing the UPP of your pension by either the term of the pension (if fixed), or a life expectancy factor - that applies to you or your spouse if they have a greater life expectancy - according to life expectancy statistics. The Australian life tables are published by the Australian Government Actuary, and the life expectancy is taken from when the pension first became payable. The annual UPP deductible amount is calculated using the following formula: A (B - C) ÷ D A = relevant share of the pension payable to you (if all the pension is payable to you then A = 1) B = is the amount of the UPP of the pension, which in your case is XXX C = is the residual capital value (if any), which in your case is XXX D = is the relevant number, which in your case is XXX By putting your information into the above formula, your annual UPP deductible amount is XXX | Detailed Reasoning - Part year calculation: As your pension was paid for XX days in the XXX income year, a pro-rated amount of XXX applies for that year. | Detailed Reasoning - Conclusion: As per the above determination, your part year UPP deductible amount for the XXX income year is XXX. Your annual UPP deductible amount for the XXX and subsequent full income year is XXX. Please note that the UPP deductible amount for the full financial year will remain the same provided the details relating to the UPP determination remain unchanged.