ATO Interpretative Decision
ATO ID 2006/161
Income tax
Foreign source income: pension - temporary residents
FOI status: may be released
Status of this decision: Decision Current
 CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.
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If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser. |
Issue
Is the taxpayer, who is a temporary resident of Australia, assessable in Australia on United Kingdom (UK) sourced pension income?
Decision
No. The taxpayer who is a temporary resident of Australia is not assessable in Australia on UK sourced pension income.
Facts
The taxpayer is a resident of Australia for the purposes of Australian tax.
The taxpayer is also a 'temporary resident' of Australia as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997).
The taxpayer derived pension income from the UK while the taxpayer was a temporary resident of Australia.
Reasons for Decision
Subsection 6-5(2) of the ITAA 1997 provides that 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. The pension income derived by the taxpayer from the UK is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.
However, Subdivision 768-R of the ITAA 1997 provides tax relief for most foreign income derived by temporary residents of Australia.
In particular, section 768-910 of the ITAA 1997 provides that ordinary income derived from a foreign source, excluding employment related income and capital gains on shares and rights acquired under employee share schemes, is non-assessable non-exempt income when derived by a temporary resident of Australia.
The taxpayer's pension income from the UK, being ordinary income from a foreign source, is non-assessable non-exempt income under subsection 768-910(1) of the ITAA 1997 as the taxpayer was a temporary resident of Australia when the taxpayer derived it.
Subsection 6-15(3) of the ITAA 1997 provides that if an amount is non-assessable non-exempt income, it is not assessable income. Therefore, the taxpayers pension income from the UK is not assessable income.
Date of decision: 23 June 2006
| Year of income: | 30 June 2007 |
Legislative References:
Income Tax Assessment Act 1997
subsection 6-5(2)
subsection 6-15(3)
Subdivision 768-R
section 768-910
subsection 995-1(1)
Related ATO Interpretative Decisions
ATO ID 2006/162
ATO ID 2006/163
Keywords
Foreign pension income
International tax
Resident/residency
United Kingdom
Temporary resident
Non-assessable non-exempt income
Date of publication: 7 July 2006
ISSN: 1445-2782
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