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Tax Treatment of Australian Pension (Article 18) – IRS Tax Treaty

Tax Treatment of Australian Pension (Article 18) - IRS Tax Treaty (Board-Certified Specialist)

Tax Treatment of Australian Pension (Article 18) – IRS Tax Treaty (Board-Certified Specialist)

Tax Treatment of Australian Pension (Article 18) – IRS Tax Treaty

When it comes to IRS compliance for individuals with assets in Australia and one important issues for Taxpayers is the IRS Tax Treatment of Australian Pension. There are multiple treaties in place between the United States and Australia, including a Totalization Agreement and FATCA Agreement.

Tax Treatment of Australian Pension

One major concern for U.S. persons with Australia Pension and Retirement, is “what is the IRS Tax Treatment for an Australian Pension.” IRS Tax Treatment for an Australian Pension will vary, based on the origin of the pension and how payments are being made. 

The Australia U.S. Tax Treaty provides a basics summary of how pension will be taxed. The summary is listed primarily in Article 18.

What Does the U.S. & Australia Treaty Say?

Here is what the Australia U.S. Tax Treaty provides:

Article 18 of the Australia Tax Treaty

(1) 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.


(2) Social Security payments and other public pensions paid by one of the Contracting States to an individual who is a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first-mentioned State.


(3) Annuities paid to an individual who is a resident of one of the Contracting States shall be taxable only in that State.


(4) The term “pensions and other similar remuneration”, as used in this Article, means periodic payments made by reason of retirement or death, in consideration for services rendered, or by way of compensation paid after retirement for injuries received in connection with past employment.


(5) The term “annuities”, as used in this Article, means stated sums paid periodically at stated times during life, or during a specified or ascertainable number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered or to be rendered). (6) Any alimony or other maintenance payments, including payments for the support of a minor child, arising in one of the Contracting States and paid to a resident of the other Contracting State, shall be taxable only in the first-mentioned State.


How to Determine IRS Tax Treatment of Australian Pension?

Before assessing whether your pension payments are taxable by the IRS, it is important to review the treaty, determine what type of pension you have, and how the payments are being made.

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International Tax Attorney (Specialist) Offshore Asset & Account Disclosure

International Tax Attorney (Specialist) Offshore Asset & Account Disclosure

Golding & Golding: Our international tax lawyers practice exclusively in the area of IRS Offshore & Voluntary Disclosure. We represent clients in 70+ different countries. Managing Partner Sean M. Golding is a Board-Certified Tax Law Specialist Attorney (a designation earned by < 1% of attorneys nationwide.). He leads a full-service offshore disclosure & tax law firm. Sean and his team have represented thousands of clients nationwide & worldwide in all aspects of IRS offshore & voluntary disclosure and compliance during his 20-year career as an Attorney.

Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.
International Tax Attorney (Specialist) Offshore Asset & Account Disclosure

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