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I am trying to find out whether my Chinese government pension is taxable in Australia or not. I am a permanent resident in Australia, and concurrently a tax resident in China as well. To avoid double taxing, Australia and China have a Double Tax Agreement (DTA) which is still in force. Article 18 of the agreement says:
Pensions
Subject to the provisions of paragraph (2) of Article 19, pensions paid to a resident of a Contracting State in consideration of past employment, and payments made to a resident of that State under the social security system of the other Contracting State, shall be taxable only in the first-mentioned State.
My reading is as follows:
It is China, a contracting State, that pays me the pension for my past employment in China, and I am currently under the social security system of the other Contracting State (Australia). Therefore, my pension shall be taxable ONLY in the first mentioned State which is China.
I would appreciate if someone at ATO can help determine if this Article applies to my case, and to many other Chinese pension recipients residing in Australia.
Thanks.
Hi @helohighbj,
Let's go on bit of a dig through what the Double Taxation Agreement between Australia and China means for this (which you can find on the Treasury's page).
Article 18 says: Subject to the provisions of paragraph (2) of Article 19, pensions paid to a resident of a Contracting State in consideration of past employment, and payments made to a resident of that State under the social security system of the other Contracting State, shall be taxable only in the first-mentioned State.
This means that a government pension will only be taxable in the State it is issued by, subject to provisions of paragraph (2) of Article 19.
Here's paragraph (2) of Article 19:
2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or local authority of that State to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a citizen or national of, that other State.
(b) had me worried. What type of resident are we looking at - a resident for tax purposes, or for department of immigration/citizenship affairs? But I looked a little more into it and found this under Article 4:
1. For the purpose of this Agreement, the term "resident", in relation to a Contracting State, means a person who is fully liable to tax therein by reason of being a resident of that State under the tax law of that State.
It all boils down to this, then: if you're a tax resident in China, liable for tax in China, and you receive a Chinese government pension, it will only be taxable in China. Smiley Happy |
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复活节游CAIRNS (2005-3-30) 东食西宿 
发表于 2020-10-24 17:28
