I receive a retirement pension from China and now live in Australia — do I have to declare it on my tax return?

Picture a retired couple who moved to Australia to be near their children. Each month a pension lands in a bank account in China, the same way it has for years. Nobody in Australia sends them a payment summary for it, and it was never taxed in China, so it feels like it has nothing to do with the ATO. Then tax time arrives, the adult children are filling in myTax on their behalf, and the question comes up: does the Chinese pension go on the return?

For most people in this position the answer is yes, but the reason is not the one people expect — and there is one kind of pension where the answer is different.

The starting point: residents declare income from everywhere

If you are an Australian resident for tax purposes, you declare income earned anywhere in the world, not just in Australia. The ATO's myTax 2026 instructions for foreign pensions and annuities (published 1 June 2026, covering 1 July 2025 to 30 June 2026) say most foreign pensions and annuities are taxable in Australia, even if tax was withheld by the country the payment came from. Where the money is kept makes no difference — a pension paid into a Chinese bank account and never transferred is still income.

What decides the final answer for a Chinese pension is the tax treaty between Australia and China, signed in Canberra on 17 November 1988. It splits pensions into two groups.

Pensions for past employment and social security: taxable only in Australia

Article 18 of the treaty says that pensions paid to a resident of one country in consideration of past employment, and payments made to that resident under the social security system of the other country, are taxable only in the country where the person lives. For an Australian tax resident receiving a retirement pension from ordinary employment in China, or from China's social security system, that country is Australia.

This is why 'it wasn't taxed in China' is not a reason to leave it off. Under the treaty, Australia is the country that taxes it. The pension is added to your other income and taxed at the normal resident rates, with the tax-free threshold of $18,200 applying to your total taxable income, not to each source separately.

The exception: pensions for government service

Article 19(2) deals with pensions paid by, or out of funds created by, a country or its local authorities in respect of services rendered to that government. Such a pension is taxable only in the paying country — here, China — unless the person is both a resident and a citizen or national of the other country. So a former Chinese government employee who is an Australian tax resident but not an Australian citizen would generally not be taxed in Australia on that pension; once the same person becomes an Australian citizen, the treaty moves the taxing right to Australia.

The treaty also says this government-service rule doesn't apply where the services were connected with a trade or business carried on by the state; those pensions go back to Article 18. For former staff of public institutions or state-linked employers, which group a pension falls into is not always obvious from its name. That is the question worth checking properly, because it decides whether the pension appears on your return at all.

If a pension is not taxable in Australia, the ATO's instruction is simple: don't show it anywhere on your tax return.

How it goes on the return

In myTax you select that you had foreign income and foreign pensions or annuities, then enter each pension in the Foreign income, assets and entities section. All amounts must be converted to Australian dollars first; the ATO provides a foreign income conversion calculator. The same section asks whether, during the year, you had an interest in overseas assets worth AUD 50,000 or more — a question many retirees with savings or a flat in China will need to answer.

Some foreign pensions have an 'undeducted purchase price' (UPP): the part funded by your own personal contributions, which comes back to you tax-free. The ATO sets out specific methods only for Austrian, British, Dutch, German and Italian pensions. For a pension from any other country, including China, if you think you are able to claim a deductible amount, the route is to lodge a Request for a determination of the deductible amount of UPP, which the ATO answers through a private binding ruling.

Two common mistakes

The first is treating all Chinese pensions the same way — either declaring everything or declaring nothing. The treaty draws a real line between employment and social security pensions on one side and government-service pensions on the other, and citizenship matters for the second group.

The second is assuming the ATO won't know. The ATO's own instructions note that under Australia's tax treaties, foreign tax authorities tell it about foreign-source income paid to Australian residents, and it uses that information to check returns. Correcting an omission yourself is generally far better than waiting to be asked.

This is general information based on the Australia–China tax treaty and the ATO's myTax 2026 instructions as at September 2026, not advice about your own pension. Residency, citizenship and the exact nature of the pension all change the answer.

Our individual tax return service regularly prepares returns for retirees and new arrivals with income from China, and our income tax calculator gives a rough idea of where total income lands for FY 2026–27. For related reading, see our pieces on which exchange rate to use for overseas income, declaring overseas income under CRS, and money sent by parents from overseas.