My husband is a beneficiary of a lump sum paid as "pension arrears" from his late uncles private pension scheme. Pension fund has taken UK tax out under an emergency code. Not sure if this will be partly, fully refunded. My husband has a NT tax code in the UK.
Just wondering if he will declare this to the ATO? This was only part of monies paid under the estate.
Hi @Angela55,
Yes, your husband will need to include the pension arrears payment in his Australian tax return. As an Australian resident for tax purposes, he must declare his worldwide income, including foreign pension payments.
The arrears payment from the UK pension is foreign income, so it needs to be reported in Australian dollars. Any UK tax withheld may be claimed as a foreign income tax offset, to help avoid double taxation.
Your husband may need to provide details showing which income years the payment relates to, so the correct tax treatment can be applied.
For the foreign income tax offset, he can only claim the amount of UK tax that has actually been paid and won’t be refunded. If he later receives a refund of UK tax, that amount may need to be included in his Australian tax return in the year it is received.
Thanks for the response. Just want confirmation that if a refund of UK tax is paid in the Australian tax year following the actual pension payment (and UK tax deduction) that this is included in the year the refund is paid, and that an amended tax return is not required for the year that the actual payment and UK tax deduction was made.
From your response, it appears that any UK tax refund is added to the income in the year it is refunded?
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