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  • LCR 2020/3 The superannuation fund for foreign residents withholding tax exemption and sovereign immunity released

    We have released Law Companion Ruling (LCR) 2020/3 The superannuation fund for foreign residents withholding tax exemption and sovereign immunity. This is finalisation of draft LCR 2019/D4 which was released on 4 December 2019.

    The Ruling deals with the interpretation of Schedules 3 and 4 of the Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Act 2019, which commenced on 1 July 2019.

    The Ruling provides specific guidance on key concepts relating to the limitation of the superannuation fund for foreign residents withholding tax exemption and the codification and limitation of sovereign immunity, including:

    • the influence test
    • sovereign entity group
    • 'public monies'
    • public financial and public non-financial entities
    • central banking activities
    • consular functions.

    LCR 2020/3 will provide certainty to foreign investors in understanding their eligibility for these tax exemptions when they invest in Australia. The Ruling includes eleven examples that illustrate the application of the law.

    The new law commenced on 1 July 2019, with transitional rules applying (where certain conditions are satisfied) to cover income and gains from existing investments made by foreign investors for up to seven years until 1 July 2026.

    If you are affected, we encourage you to read the Ruling and seek advice (if needed) on how it applies to your situation.

    Through our early engagement process, you can discuss with us complex business transactions you are considering or have implemented. We'll work with you and your tax advisor to:

    • explore your tax arrangement
    • provide advice to help you arrive at the right outcome
    • commence a private ruling application.

    For further information contact us by:

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    Last modified: 16 Dec 2020QC 64434