Contact UsI hold was born in Australia. In 2009 I became a US Citizen so now hold dual citizenship. Prior to 2009 I held an Australian Superannuation Account which ceased in 2006 when I retired. I now receive a monthly pension from this account which the Australian Govt treats as tax free. I live permanently in Australia and my accountant advises me that, as this pension is derived from funds accumulated before my US Citizenship, that it is not reportable to the IRS. Is this correct ?
I know that the fund is reportable on FBAR but just want to confirm the situation with the monthly pensions.
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Tax Professional Answers
Fred Rollo
The Australia-United States Tax Convention is quite clear regarding the tax treatment of non-government pensions. Article 18(1) of the treaty provides that-
"Subject to the provisions of Article 19 (Governmental Remuneration), pensions and other similar remuneration paid to an individual who is a resident of one of the Contracting States in consideration of past employment shall be taxable only in that State."
Accordingly, so long as you are resident in Australia for taxation purposes, Australia has the exclusive right to taxation. If you are retired and over 60 years old, Australia does not generally tax Australian source pension payments.
If you are also required to submit a US return, you need to check whether the Australian pension should be disclosed, but claimed as exempt under Article 18 of the Treaty. The issue may be somewhat more complex if you have a tax residence in both countries.
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568 weeks ago
"Subject to the provisions of Article 19 (Governmental Remuneration), pensions and other similar remuneration paid to an individual who is a resident of one of the Contracting States in consideration of past employment shall be taxable only in that State."
Accordingly, so long as you are resident in Australia for taxation purposes, Australia has the exclusive right to taxation. If you are retired and over 60 years old, Australia does not generally tax Australian source pension payments.
If you are also required to submit a US return, you need to check whether the Australian pension should be disclosed, but claimed as exempt under Article 18 of the Treaty. The issue may be somewhat more complex if you have a tax residence in both countries.
Chuck Heyde, CPA, CGMA
Distributions from an Australian Superfund are NON-taxable on the US income tax return.
IF you have to file a US return, you would simply input the details of the distribution on Form 8833 (no tax calculated herein).
You do not have to file a US return simply for this transaction.
Chuck Heyde, CPA, CGMA
www.GEMMS.us
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562 weeks ago
IF you have to file a US return, you would simply input the details of the distribution on Form 8833 (no tax calculated herein).
You do not have to file a US return simply for this transaction.
Chuck Heyde, CPA, CGMA
www.GEMMS.us