Skip to main content
Exfin Home Exfin Home
  • Home
  • About
  • Site Map
  • Contact Us
  • News and Views
  • British Expatriate Links
  • Expat Locations
6 December, 2019

Services

  • Retirement Planning
  • Super and Pensions
    • Some Demographics
    • History & Background
    • Choosing a Super Fund
    • Super Performance
    • Types of Super Fund
    • Contributing to Super
    • Downsizing Contributions
    • Taxation of Super
    • Accessing Super
    • Conditions of Release
    • Death Benefit Nominations
    • The Transfer Balance Cap
    • Self Managed Super Funds (SMSF)
    • Small APRA Funds
    • Transition to Retirement Pensions
    • Age Pension Rates and Tests
    • Senior Concession Cards
    • Converting Assets to Income
    • Pensions, Private Trusts and Companies
    • Winding up an SMSF
    • Foreign Pensions
    • Foreign Pension Transfers
    • Retiring Overseas
  • Retirement Villages
  • Aged Care Overview
  • Home Care Services
  • Aged Care Accommodation
  • Working in Retirement
  • Retiring Overseas
  • Insurance
  • Legal Matters
  • Professional Advice

Other Resources

  • Commentary & Blog
  • News & Views
  • Retirement Links
  • Age Pension Calculator
  • Giving to Charities
  • Glossary
  • Downloads
  • Newsletter
  1. Super and Pensions
  2. Foreign Pensions in Australia

Foreign Pensions in Australia

Treatment of Foreign Pensions in Australia

General Position

A significant number of Australian retirees receive foreign pension and benefits; just over 200,000 according to figure from the Australian Bureau of Statistics (2016/2017).

The majority of foreign pensions and annuities received by Australian residents are taxable in Australia, but there are exceptions (including US social security payments) and tax advice is strongly recommended prior to your first receipt of any pension.

If withholding tax applies in the source country then you may be able to claim a foreign tax offset in Australia, to ensure there is no double taxation of your income subject to:

  • your not being entitled to seek a refund of the foreign tax from the source country, and
  • the foreign pension or annuity also being taxable in Australia.

Note that if your pension or annuity is paid from a country with which Australia has a tax treaty, you may also be able to make arrangements to have no tax withheld from your pension payments. Note that these treaties typically include information sharing arrangements which include foreign countries reporting income paid to Australian residents to the ATO.

Claiming a "Undeducted Purchase Price" (UPP) Deduction

In some situations, but not all, you may be able to claim that some part of your pension represents a return of your contributions and should therefore not be taxable - this is referred to as the pension's "Undeducted Purchase Price" or "UPP". The UPP is usually calculated by dividing your contribution to your pension or annuity by a life expectancy factor, according to life expectancy statistics.

The ATO has established practices in terms of how to calculate the UPP of certain UK, Dutch, Austrian, German and Italian pensions - for example, the UK pension deduction is typically 8% and 25% for Dutch pensions. For others, you will need to contact the foreign pension provider for certain information and then request a specific UPP determination from the ATO. Many individuals will find professional advice useful in these circumstances.

Impact on Social Security Benefits

Overseas income, including pension income, is included in the "income test" applying to social security benefits such as the age pension; Centrelink uses specific exchange rates to convert your overseas income into AUD. Consequently, the receipt of a foreign pension may reduce your Australian pension by up to 50 cents for every $1 of comparable foreign pension received, if you exceed the income free limit.

Exceptions exist in terms of some restitution payments which are considered exempt income, and some pensions under Social Security agreements. Also, if you are relying upon a social security agreement to meet minimum residency requirements, then any overseas payment may be simply deducted from your local pension entitlement.

This is a complex area and it is suggested that individuals contact Centrelink's International Services department, based in Tasmania, on 131 673, for further information regarding any foreign pension entitlements - but Centrelink will not provide tax or other professional advice.

Complete an Inquiry form

IMPORTANT: The material contained within this website and other associated communications is only intended as general, background information and it is not intended to be relied upon. No warranty is provided in relation to any material or to the services that may be contracted through SimplyRetirement.com.au or related entities. It is strongly recommended that individuals seek the advice of qualified professionals before taking any action.



For Download

Click here to download the Short Buying Guide (PDF)

Subscribe to our newsletter

Advertisement

  • Home
  • Legal
  • Privacy
  • Site Map
  • Advertise with Us
  • Contact Us
Copyright © 2019 Complete Retirement Group Pty Ltd

Pixel Ink Media Web Development