Pensions and Annuities
These are non-Government private pension/annuity statements. An annuity is a series of payments, usually purchased with a lump sum payment from a life insurance company. A pension is a series of regular payments, made as a superannuation income stream.
These payments include those paid
- By an Australian superannuation fund, life assurance company, or retirement savings account (RSA) provider
- By a fund established for the benefit of Commonwealth, state, or territory employees and their dependents
- While you were still working
- As a result of someone’s death
In this case, a pension does not include the government’s ‘age pension.’
Most pensions and annuities include both taxable and tax-free components. You do not have to report tax-free components on your tax return. They are shown on your PAYG payment summary, are non-assessable, non-exempt income. However, you must declare the taxable component on your return.
Australian residents must declare foreign income. Worldwide income is subject to tax. You must declare all of your income, no matter what the source. Foreign income includes foreign pensions and annuities, foreign employment, foreign investment, foreign business, and capital gains on foreign assets.
Foreign income is subject to tax in the foreign country where it originated. In order to combat double taxation, there are a series of credits and exemptions – thanks to the Australian government’s tax treaties with more than 40 countries – that should help you get some of that money back.
If you are not an Australian resident, then you may not have to declare your income from non-Australian sources.
Rental income is money you earn as a result of renting your property. You must report rent and rent-related payments you receive, or become entitled to when you rent out your property. Include payments made to your agent in your income.
If the rent you receive is in the form of goods or services, work out the monetary value. Declare it on your tax return. Include the rental bond money you become entitled to retain – perhaps because a tenant defaulted or damaged your property in rental income and it must also be declared.
Capital gains result from selling an asset, including real estate, shares, and managed fund investments. You must declare all income from capital gains on your tax return. The difference between an asset’s cost basis (what you paid for it) and capital proceeds (what you received when you sold it) is a capital gain. Capital gains are distributed to you by a managed fund or another unit trust.
Do note that, though the ATO often refers to a ‘capital gains tax’ (CGT), there is no separate tax on capital gains. They are simply treated and taxed as part of your overall income.
Yes, you must declare dividends you receive on your tax return. You should receive a dividend statement indicating a number of dividends paid to you and on what date.
What are dividends?
Dividends are payments or credits made by an Australian company that you own shares in. If you received Dividend payments from investments during the year you will receive a Dividend Statement. Please enter the information required as shown on each of these statements. Do not enter income from a trust or partnership distribution at this question.
You can receive dividends from a listed investment company, a public trading trust, a corporate unit trust, or a corporate limited partnership. Dividends may be in a payment in the form of money or property, including shares.
Dividends are subject to tax under an imputation system. This means that companies pay tax on their dividends and then pass franking credits on to their shareholders along with the dividends they receive. Therefore, if you receive dividends that have been franked, you may be able to receive a franking tax offset for the tax the company has already paid on those dividends.
Learn how to claim a tax deduction on interest and dividend income here.