International tax & business 2011

Taxation of foreign pensions

Source: The Tax Specialist Journal Article

Published Date: 1 Oct 2011


Both Australia and the United States recognise the need for their citizens to be able to self-fund their retirement, and the importance of having a globally mobile workforce. This article assesses the tax impact that Art 18, "Pension, Annuities, Alimony and Child Support", of the US Australia double tax treaty would have on the mobility of human capital between Australia and the US. In the author's view, in its current form, Art 18 has the potential to significantly hinder the free flow of human capital, for reasons which are discussed in the article.

The article outlines the current position, including the Australian and US tax treatment of retirement benefits. The article then examines the US domestic treatment of Australian superannuation, and the current Australian treatment of US pensions. The author recommends that Art 18 be amended so that Australian and US-sourced benefits are taxed in accordance with the rules of the country in which the benefits were derived.

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International tax & business 2011

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