10.21.8.40 Proportional Income - Agreement with Switzerland

Proportional income

Article 19 of the Agreement provides that only a proportion of Swiss benefit is to be assessed as income when calculating the proportional rate of Australian benefit. This concessional treatment only applies when the person's Australian benefit is proportionalised (calculated using the outside Australia rate in 10.21.8.20). See 10.1.9.40 for the general method of working out proportional income under Agreements.

Assessment of Swiss lump sum payments - outside versus inside Australia rates

Article 19(8), directs that any Swiss lump sum payments are assessed as income for 12 months from the date of grant when calculating the rate of Australian benefit.

For people in Australia who rely on the Agreement to qualify (e.g. with less than 10 years residence), Article 19(4), specifies that the amount is to be treated as direct deductions.

Lump sum benefits are not paid to Swiss residents but if an Australian pensioner residing in a third country receives such a payment, the concessional assessment in Article 19(1) may be applied to that amount, if relevant, for the 12 months it is taken into account.

Assessment of Swiss refunds

Swiss refunds under the Agreement are regarded as a lump sum and maintained as income for 12 months under normal SSAct income testing rules.

Note: A Swiss refund of this type is not regarded as a Swiss benefit so the income test concession afforded by Article 19(1) and the direct deduction rule in Article 19(4) do not apply. Also note, Article 18(4) deems that a Swiss insurance period cannot be used to totalise if a refund of contributions has been received.