Assessability of Swiss superannuation pension received by Australian resident

Is a Swiss superannuation pension received by an Australian resident taxpayer assessable under section 27H of the Income Tax Assessment Act 1936 (ITAA 1936)?

Yes. A Swiss superannuation pension received by an Australian resident taxpayer is assessable under section 27H of the ITAA 1936.

The taxpayer is a resident of Australia for income tax purposes.

The taxpayer receives a superannuation pension from Switzerland.

The superannuation pension does not relate to the Swiss legislation relating to military insurance.

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

Section 6-10 of the ITAA 1997 further provides that a taxpayer's assessable income includes statutory income amounts which are not ordinary income but are included in assessable income by another provision. Subsection 6-10(4) of the ITAA 1997 states that the assessable income of an Australian resident includes statutory income from all sources, whether in or out of Australia.

Section 10-5 of the ITAA 1997 lists those provisions about assessable income. Included in this list is section 27H of the ITAA 1936 which provides that annuities and pensions paid from foreign superannuation funds or foreign scheme to provide superannuation benefits are included in assessable income.

In determining liability to Australian tax on foreign sourced income received by a resident it is necessary to consider not only the income tax laws but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (Agreements Act).

Section 4 of the Agreements Act incorporates that Act with the ITAA 1936 and ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except for some limited provisions).

Schedule 15 to the Agreements Act contains the agreement between Australia and Switzerland (Swiss Agreement).

Article 18 of the Swiss Agreement specifies how pensions and annuities are to be taxed. Paragraph (1) of Article 18 of the Swiss Agreement provides that pensions and annuities paid to a resident of Australia are taxable only in Australia.

Subparagraph (b) of paragraph (3) of Article 18 of the Swiss Agreement provides that pensions received from Switzerland under the legislation concerning military insurance will be exempt from Australian tax if they are exempt from Swiss tax.

The superannuation pension received by the taxpayer is not related to military insurance and therefore is not exempt from tax under subparagraph (b) of paragraph (3) of Article 18 of the Swiss Agreement.

As the taxpayer is an Australian resident for income tax purposes, the superannuation pension is assessable under section 27H of the ITAA 1936.