Private ruling: Foreign income
Published: December 2013
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: 1 July 2011

Ruling: Question and answer: | Are the pension payments received by the deceased from the Government of Country Y assessable income? | Yes.

Relevant facts and circumstances: The deceased was a resident of Australia for taxation purposes. The deceased received payments from the government of Country Y. You state that the payments were a pension. The pension was paid periodically into a bank account in Country Y. Payments were received after the deceased's death.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5(2)

Reasons for decision: Summary: Pension payments from the Government of Country Y are not dealt with specifically in Australian tax legislation. Therefore we need to turn to general sections concerning income, and in your case, section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) is the appropriate section for consideration. Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident includes income according to ordinary concepts (ordinary income) derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Based on case law, it can be said that ordinary income generally includes receipts that: · are earned · are expected · are relied upon, and · have an element of periodicity, recurrence or regularity. In this case the pension payments received by the deceased from the government of Country Y had the characteristics of ordinary income as the payments were expected, the payments were relied on, and an element of periodicity, recurrence or regularity is evident as the payments were paid on a periodic basis. The payments are therefore ordinary income and are assessable under section 6-5 of the ITAA 1997 and should be declared in the estate's tax return.

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