Do I pay Australian tax on a UK defined benefit pension lump sum?

 Author: JayATO(Community Support)Community Support

13 Apr 2026

Hi @dmuncaster,

Yes, you'll need to declare your UK defined benefit pension lump sum in your Australian tax return. Most foreign pensions and annuities are taxable in Australia, even if tax was withheld by the UK. You might be eligible for a foreign income tax offset for any amounts withheld.

The tax treatment depends on whether this payment comes from a foreign super fund or a regular pension scheme. If it's from a foreign super fund, a lump sum payment may be tax-free if you receive it within 6 months after you become an Australian resident or after you terminate your foreign employment. If you don't receive it within this timeframe, you'll need to include the applicable fund earnings in your tax return. Applicable fund earnings are the growth on your fund that built up after you became an Australian resident for tax purposes, and these are generally taxed at 15%.

If your UK pension is not a super fund but a regular pension scheme, different rules apply. The payment will be assessable income taxed at your marginal tax rate.

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