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Re: Tax on overseas pensions

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How are overseas (in the UK) pensions taxed for Australian residents?

 

I have a UK pension.  I'm not taking an income from it.. it's just growing in value.

Do I have to pay tax on the growth each year or do I only pay tax when I draw an income from it?

 

What, if anything, changes if that UK pension is moved into a "Drawdown" state in the UK?

 

Are the rules the same for UK ISAs?  i.e. do you only pay tax when you withdraw money from them or do you have to pay tax on thr growth every year?

 

Thanks,

Long John

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Hi @LongJohn,

 

Thanks for getting in touch!

 

@macfanboy is correct - if you're an Australian resident for tax purposes you only need to declare your assessable foreign income in your Australian tax return. 

 

Most foreign pensions and annuities are taxable in Australia when you receive payments or lump sum amounts, even if tax was withheld from your payment in the UK.

 

However, depending on the type of pension or annuity you may be able to claim a foreign income tax offset if:

  • the country from which your foreign pension or annuity came withheld tax from your payment
  • you were not entitled to seek a refund of the foreign tax from that country, and
  • the foreign pension or annuity is also taxable in Australia.

Thanks, JodieH.

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Don't declare anything until you receive income from it.

 

Best answer

ATO Certified

Community Support

Replies 1

Hi @LongJohn,

 

Thanks for getting in touch!

 

@macfanboy is correct - if you're an Australian resident for tax purposes you only need to declare your assessable foreign income in your Australian tax return. 

 

Most foreign pensions and annuities are taxable in Australia when you receive payments or lump sum amounts, even if tax was withheld from your payment in the UK.

 

However, depending on the type of pension or annuity you may be able to claim a foreign income tax offset if:

  • the country from which your foreign pension or annuity came withheld tax from your payment
  • you were not entitled to seek a refund of the foreign tax from that country, and
  • the foreign pension or annuity is also taxable in Australia.

Thanks, JodieH.

Newbie

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Thanks for the responses

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