Assessability of a War Time Persecution Pension paid by Norway

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 Norway?

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 Norway as it is exempt income under subparagraph 23(kca)(iii) of the Income Tax Assessment Act 1936 (ITAA 1936).

The taxpayer is an Australian resident.

The taxpayer's spouse was the subject of war time persecution during World War II while a prisoner of the Japanese.

The taxpayer receives a war widows pension from Norway. The Norwegian Government has confirmed that this pension is paid as a result of the persecution that the taxpayer's spouse experienced during World War II.

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 during the income year.

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

Paragraph 23(kca) of the ITAA 1936 provides that certain pensions, annuities and allowances will be exempt. Subparagraph 23(kca)(iii) of the ITAA 1936 provides that a pension, annuity or allowance will be exempt where it is made under a law, other than a law of the Commonwealth, State or Territory and: • relates to, or takes into account, the persecution, during World War II of the recipient or another person by forces of an enemy of the Commonwealth, or flight from such persecution (subsubparagraph 23(kca)(iii)(A) of the ITAA 1936); or • relates to a disability arising out of the participation of the recipient or another person in a resistance movement during World War II against forces of an enemy of the Commonwealth (subsubparagraph 23(kca)(iii)(B) of the ITAA 1936).

The pension paid to the taxpayer is made under a law of Norway. The Norwegian Government has confirmed that the pension was paid as a result of the persecution the taxpayer's spouse experienced as prisoner of the Japanese during World War II.

The fact that the payment was not made to the person who suffered the persecution is not relevant as subsubparagraph 23(kca)(iii)(A) of the ITAA 1936 provides that the pension may relate to the persecution of another person.

Therefore, the taxpayer's pension falls within the meaning of subparagraph 23(kca)(iii) of the ITAA 1936 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