@aussiebobaustin , just a little addition to my earlier note / position above.
1. Recognizing the purpose of Tax treaties ( for individuals at least ) is to eliminate / ameliorate the double taxation burden while allowing for idiosyncrasies of domestic tax laws and administration thereof.
2. The double taxation amelioration is generally achieved through exclusion of incomes or tax credit etc. This often results in limiting which country gets to tax the income ( generally by source or type) or by limiting the tax rate.
3. In the case of Australian Superannuation fund ( generally a privatized & govt. mandated pension scheme ), can be treated as equivalent of US SSA ( because it is govt. mandated even though privately managed ) or as a private trust.
4. No matter which interpretation the tax payer chooses ( i.e. treat the fund as a trust OR as a public / govt. funded distribution ) there is an assumption that this distribution needs to be taxed by one state or the other. This is because all incomes are taxed either by the source country or the residence country or both -- but taxed it is.
5. Give the above it implies that the taxpayer must facilitate the re cognition of the income for taxation purposes.
6. Therefore if you treat this distribution as SSA equivalent and not taxable by the USA , you must file an Australian return and therefore be taxed under Australian tax laws. If you choose not to file a return with Australia ( and therefore not giving source country to tax the distribution ) then in effect you are taking the position that you do not recognize the tax treaty and therefore this is distribution from a foreign trust or an annuity. This then becomes ordinary income for purposes of US taxation.
7. Al.so note that your state of domicile may not recognize the tax treaty between US and Australia -- thus this is taxable income for the state.
Does this make sense ?
Is there more I can do for you ?
pk
