by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Forward Thinking Magazine : December 2010
Increasingly Australian financial advisers are encountering clients with entitlements in offshore pension schemes which either cannot be transferred back to Australia or are voluntarily left offshore for numerous possible reasons. This article examines a number of issues encountered in determining the taxation treatment of foreign sourced pension payments received by an individual who is an Australian resident for taxation purposes. First principles – pension payments are generally ordinary income Expatriate games – part VI: Tax considerations of foreign sourced pension payments Techtalk Written by David Barrett, Head of MAStech 17 Read this story to receive CPD points. Simply log on to macquarie.com.au /ftmagazine The regular nature of pension payments usually results in those payments being treated as income according to ordinary concepts (‘ordinary income’) for taxation purposes. Hence pension payments are prima facie assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA97), and taxable at marginal tax rates. Various specific provisions in the Australian taxation acts override this position and provide concessional and/or exempt taxation treatment of pension payments made by Australian complying superannuation funds. For example, section 301-10 of ITAA97 provides that pension payments made by taxed Australian complying superannuation funds to persons over the age of 60 are not assessable and not exempt income. However, in general the only tax concession likely to apply to foreign pension payments is section 27H of the Income Tax Assessment Act 1936 – i.e. a deductible amount based on the undeducted purchase price of the foreign pension. So generally foreign pension payments will be treated as assessable income and taxed at the Australian resident’s marginal tax rate, with tax relief applying to the section 27H deductible amount, if any.