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Is the taxpayer, a resident of Australia, assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) on a war time persecution pension received from Austria?

No. The taxpayer, a resident of Australia, is not assessable under subsection 6-5(2) of the ITAA 1997 on a war time persecution pension received from Austria as it is exempt income under subsection 768-105(1) of the ITAA 1997.

The taxpayer is a resident of Australia.

The taxpayer is entitled to a pension from the Austrian government as a victim of National Socialist (Nazi) persecution during World War II.

The payment was not directly or indirectly from any of the taxpayer's associates.

Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident of Australia includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

Pension payments are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.

However, subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income it is not assessable income.

Section 768-105 of the ITAA 1997 provides an exemption for compensation payments arising out of Second World War.

Subsection 768-105(1) of the ITAA 1997 provides that a payment is exempt from income tax if: (a) you are an Australian resident at the time when it would otherwise be included in your assessable income; and (b) the payment is from a source in a foreign country; and (c) the payment is in connection with: (i) any wrong or injury; or (ii) any loss of, or damage to, property; or (iii) any other detriment; suffered by you or another individual as a result of: (iv) persecution by the National Socialist regime of Germany during the National Socialist period; or (v) persecution during the Second World War by any other enemy of the Commonwealth or by a regime covered by subsection (3); or (vi) flight from persecution mentioned in subparagraph (iv) or (v); or (vii) participation in a resistance movement during the Second World War against forces of the National Socialist regime of Germany or against forces of any other enemy of the Commonwealth; and (d) the payment is not directly or indirectly from any of your associates.

The taxpayer is an Australian resident when the payment is made. The pension is paid by the Austrian Government to the taxpayer under a law of Austria. The pension was paid as a result of the persecution by the national Socialist regime of Germany during the National Socialist period. The payment was not directly or indirectly from any of the taxpayer's associates.

Therefore, the taxpayer's pension falls within the meaning of subsection 768-105(1) of the ITAA 1997 and is exempt from tax in Australia. Accordingly, the pension is not included in the taxpayer's assessable income under subsection 6-5(2) of the ITAA 1997.

Date of Amendment Part Comment 10 June 2016 References Update Siebel case ID

Date of Amendment | Part | Comment

10 June 2016 | References | Update Siebel case ID