• Foreign super fund private ruling information sheet for 2008 and onwards

    Attention

    To be read in conjunction with the Private ruling application form (not for tax professionals) (NAT 13742).

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    This information sheet provides a general guide on preparing and lodging a valid private ruling application for tax exemption on interest and dividend income derived from Australia by a superannuation fund for foreign residents. This information sheet addresses the situation where a private ruling is being requested by an applicant on behalf of another entity - that is, a superannuation fund for foreign residents.

    Attention

    It must be remembered that an entity may be subject to Australian tax on any income derived from an Australian source which does not constitute interest and/or dividend income. This includes fund payments from managed investment trusts, royalties, rental income from Australian property or capital gains on disposal of an Australian asset, being taxable Australian property. An Australian income tax return will generally be required to be lodged in relation to assessable income (but not for payments subject to final withholding tax).

    If a ruling is sought on the assessability or otherwise of any other income of the entity, the application must include questions and issues additional to those set out in this information sheet.

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    Covering letter

    There is no obligation to lodge a private ruling application on the Tax Office approved private ruling application form, but all the questions asked in the form must be answered. The form or application letter answering all the questions must be signed by the applicant.

    We suggest you use the following wording in a covering letter attached to the form or application letter:

    The applicant is applying for a private ruling on behalf of the XYZ Pension Fund (the entity) on whether interest and/or dividend income derived from Australia by the trustee of the entity is:

    (a) excluded from liability to withholding tax under paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 (ITAA 1936), and

    (b) not assessable and not exempt income of the entity under section 128D of the ITAA 1936.

    Alternatively, if the application relates to a master/group trust, we suggest you use the following wording:

    The applicant is applying for a private ruling on behalf of the XYZ master/group trust and its participating fund(s) (collectively referred to as the 'entity') on whether interest and/or dividend income derived from Australia by the trustee of the entity is:

    (a) excluded from liability to withholding tax under paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 (ITAA 1936), and

    (b) not assessable and not exempt income of the entity under section 128D of the ITAA 1936.

    Answering questions asked on the form

    Section A: Details of the entity and the trustee this private ruling is for

    Question 1 and 2

    These relate to details of the entity this ruling is for.

    Section B: Your contact details

    Questions 3 to 6

    These relate to details of the applicant [the person applying for a private ruling on behalf of the entity].

    Section C: Your question/s and facts

    Question 7 - Questions and issues to be answered by the Commissioner:

    Questions

    The following is suggested wording. If you use your own wording, note that the appropriate sections of the ITAA 1936 and the Income Tax Assessment Act 1997 (ITAA 1997) must be quoted in your questions to the Commissioner.

    The applicant wishes the Commissioner to rule on the following:

    1. Is the trustee of the XYZ Pension Fund (the entity) excluded from liability to withholding tax on its interest and/or dividend income derived from Australia under paragraph 128B(3)(jb) of the ITAA 1936?
    2. Is interest and/or dividend income derived from Australia by the trustee of the entity not assessable and not exempt income of the entity under section 128D of the ITAA 1936?

    If the application relates to a master/group trust situation, the following is suggested wording:

    1. Is the trustee of the XYZ Master/Group Trust and its participating funds excluded from liability to withholding tax on its interest and/or dividend income derived from Australia on behalf of the participating funds under paragraph 128B(3)(jb) of the ITAA 1936?
    2. Is interest and/or dividend income derived from Australia by the trustee of the XYZ Master/Group Trust on behalf of the participating funds not assessable and not exempt income under section 128D of the ITAA 1936?

    Issues

    The first issue to be addressed in the ruling is whether the XYZ Pension Fund (the entity) qualifies as a 'superannuation fund for foreign residents' as defined in subsection 118-520(1) of the ITAA 1997 and, therefore, is excluded from liability to withholding tax on its interest and dividend income derived from Australia under paragraph 128B(3)(jb) of the ITAA 1936.

    If paragraph 128(B)(3)(jb) of the ITAA 1936 applies, the second issue to be addressed is whether that interest and/or dividend income derived by the trustee on behalf of the entity is not assessable and not exempt income under section 128D of the ITAA 1936.

    The following is suggested wording for the issues to be addressed in the ruling:

    The applicant requests that the Commissioner address the following issues:

    1. Does the XYZ Pension Fund (the entity) qualify as a 'superannuation fund for foreign residents' as defined in subsection 118-520(1) of the ITAA 1997? If so, is the trustee of the entity excluded from liability to interest and/or dividend withholding tax under paragraph 128B(3)(jb) of the ITAA 1936?
    2. If the trustee of the entity is excluded from liability to interest and/or dividend withholding tax under paragraph 128B(3)(jb) of the ITAA 1936, is the interest and/or dividend income derived by the trustee on behalf of the entity not assessable and not exempt income under section 128D of the ITAA 1936?

    For a master/group trust situation, the following is suggested wording for the issues to be addressed:

    1. Does each participating fund qualify as a 'superannuation fund for foreign residents' as defined in subsection 118-520(1) of the ITAA 1997? If so, is the trustee of each participating fund excluded from liability to interest and/or dividend withholding tax under paragraph 128B(3)(jb) of the ITAA 1936?
    2. If the trustee of a participating fund is excluded from liability to interest and/or dividend withholding tax under paragraph 128B(3)(jb) of the ITAA 1936, is the interest and/or dividend income derived by the trustee on behalf of the participating fund not assessable and not exempt income under section 128D of the ITAA 1936?
    Attention

    The exemptions under paragraph 128B(3)(jb) and section 128D do not apply to other income of the entity from an Australian source which does not constitute interest and/or dividend income, such as fund payments from managed investment trusts, royalties, rental income from Australian property or capital gains on disposal of an Australian asset, being taxable Australian property. If the entity derives such income, it may have to lodge an Australian tax return and may be subject to Australian tax.

    If a ruling is sought on the assessability or otherwise of any other income of the entity, the application must include questions and issues additional to those set out in this information sheet.

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    Question 8 - Facts describing the scheme or circumstance

    The following documentation must be included with the application:

    1. A copy of a certificate or letter from the tax authority in the country where the entity is resident, confirming that the entity is exempt from income tax on its interest and dividend income in that country for at least one year during the application period of the ruling.
    Attention

    If the entity is not exempt from income tax on its interest and/or dividend income in its home country, withholding tax exemption under paragraph 128B(3)(jb) of the ITAA 1936 cannot be granted and section 128D of the ITAA 1936 will not apply.

    It is important to note, the date of the certificate or letter confirming the entity's tax exempt status in its home country may impact on the ruling application period. Please refer to the outline below for Question 12.

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    1. A copy of the trust deed and rules (if any) for the entity, detailing the establishment, operating rules, the superannuation benefits and entitlements provided.
    2. A statement from the trustee of the entity advising that at the time of making this statement:
      • the entity is an indefinitely continuing fund and a provident, benefit, superannuation or retirement fund
      • the entity was established in a foreign country
      • the entity was established, and is maintained, only to provide benefits for individuals who are not Australian residents
      • the central management and control of the entity is carried on outside Australia by entities none of whom is an Australian resident
      • an amount paid to the entity or set aside for the entity has not been or cannot be deducted under the ITAA 1997, and
      • a tax offset has not been allowed or is not allowable for such an amount.
       
    3. A copy of the entity's most recently completed annual financial reports.
    4. If available, a copy of any publication, brochure or pamphlet issued to the entity's members explaining the entity and benefits available. Any such publication, brochure or pamphlet should have been issued within a period of two years prior to the date of the ruling request.

    If the application relates to a master/group trust situation, the following information must be included with the application:

    1. A list of the participating funds of the master/group trust and identification of each participating fund in respect of which an application has been made.
    2. A copy of a certificate or letter issued during the application period when the ruling is sought, from the tax authority in the country where the master/group trust is resident, confirming that the master/group trust is exempt from income tax on its interest and dividend income in that country.
    3. A copy of a certificate or letter applicable during the period when the ruling is sought, from the tax authority in the country where each participating fund is resident, confirming that each participating fund is exempt from income tax on its interest and dividend income in that country.
    Attention

    If the master/group trust or any of its participating fund(s) is not exempt from income tax on its interest and/or dividend income in its home country, withholding tax exemption under paragraph 128B(3)(jb) of the ITAA 1936 cannot be granted and section 128D of the ITAA 1936 will not apply.

    It is important to note, the date of the certificate or letter confirming tax exempt status in an entity's home country may impact on the ruling application period. Please refer to the outline below for Question 12.

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    1. A copy of the trust deed and the rules (if any) for the master/group trust and the participating funds, detailing the establishment, operating rules, the superannuation benefits and entitlements provided.
    2. A statement from the trustee of the master/group trust and each participating fund advising that at the time of making this statement:
      • the participating funds are indefinitely continuing funds and are provident, benefit, superannuation or retirement funds
      • the participating funds were established in a foreign country
      • the participating funds were established, and are maintained, only to provide benefits for individuals who are not Australian residents
      • the central management and control of the participating funds are carried on outside Australia by entities none of whom is an Australian resident
      • an amount paid to the participating funds or set aside for the participating funds has not been or cannot be deducted under the ITAA 1997, and
      • a tax offset has not been allowed or is not allowable for such an amount.
       
    3. A copy of the mostly recently completed annual financial reports for the master/group trust and each participating fund.
    4. If available, a copy of any publication, brochure or pamphlet issued to members explaining the master/group trust and the participating funds and the benefits available. Any such publication, brochure or pamphlet should have been issued within a period of two years prior to the date of the ruling request.

    A brief factual description of the entity or the master/group trust and its participating funds, as the case may be, with references to the abovementioned supporting documents can be provided.

    Question 9 - Your opinions and references

    It is not expected that you provide a legal argument on the issues under consideration. However, the following brief comment for this question is suggested (if you wish to do so, you may still provide your own legal arguments as to why you consider that paragraph 128B(3)(jb) and section 128D of the ITAA 1936 apply):

    Suggested wording for a XYZ Pension Fund situation:

    In accordance with the documentation supplied, the trust deed and rules in particular show that the XYZ Pension Fund (the entity) has been established as a genuine pension, superannuation and/or retirement fund solely providing superannuation benefits for non-residents of Australia. It has been set up and maintained outside of Australia by non-residents of Australia. Furthermore, no contributions to the entity are capable of being claimed as a tax offset or deduction under any section of the ITAA 1936 or ITAA 1997. The entity is exempt from income tax on its interest and dividend income in its country of residence.

    The applicant is of the opinion that the entity qualifies as a superannuation fund for foreign residents as defined in subsection 118-520(1) of the ITAA 1997, the entity's income consists of interest and/or dividends paid by a resident company and that income is exempt from income tax in its country of residence. Accordingly, paragraph 128B(3)(jb) of the ITAA 1936 provides that the entity is excluded from liability to withholding tax on the interest and dividend income it derives from Australia.

    In addition, the applicant is of the opinion that the interest and/or dividend income derived by the trustee of the entity is not assessable and not exempt income of the entity under section 128D of the ITAA 1936.

    Suggested wording for a master/group trust situation:

    In accordance with the documentation supplied, the trust deed and rules in particular show that the master/group trust and its participating funds have been established to operate as a pooled investment vehicle for the assets/funds of the participating funds. The participating funds have been established as genuine pension, superannuation and/or retirement funds solely providing superannuation benefits for non-residents of Australia. They have been set up and maintained outside of Australia by non-residents of Australia. Furthermore, no contributions to the participating funds are capable of being claimed as a tax offset or deduction under any section of the ITAA 1936 or ITAA 1997. The master/group trust and the participating funds are exempt from income tax on interest and dividend income in their country of residence.

    The applicant is of the opinion that the participating funds qualify as superannuation funds for foreign residents as defined in subsection 118-520(1) of the ITAA 1997, the master/group trust's income consists of dividends or non-share dividends paid by an Australian resident company and interest on behalf of the participating funds and that income is exempt from income tax in its country of residence. Accordingly, paragraph 128B(3)(jb) of the ITAA 1936 provides for exemption from liability to withholding tax on the interest and/or dividend income derived from Australia by the trustee of the master/group trust on behalf of the participating funds.

    In addition, the applicant is of the opinion that the interest and/or dividend income derived by the trustee of the XYZ master/group trust on behalf of the participating funds is not assessable and not exempt income of the participating funds under section 128D of the ITAA 1936.

    You should quote the following sections:

    • paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936
    • section 128D of the Income Tax Assessment Act 1936
    • subsection 118-520(1) of the Income Tax Assessment Act 1997.

    Section D: Checklist

    Questions 10 and 11

    The answers to these questions should generally be 'no'. If not, please provide an explanation.

    Question 12 - Do you know the tax or claim periods/s that you are seeking the private ruling for?

    Under this question, please use the Australian financial/tax year period 1 July 200X to 30 June 200X. For example, if you want the withholding tax exemption to apply from, say December 2007 (for example, to obtain a refund of withholding tax already deducted in December 2007), the period quoted should be 1 July 2006 to 30 June 2009.

    In most cases, a private ruling will only apply for a maximum of three years.

    However, at the time of the application you must provide a copy of a certificate or letter confirming that the entity is income tax exempt on its interest and dividend income in that country for at least one year during the application period of the ruling.

    For example, if your application encloses a tax exemption letter issued for the calendar year that commenced 1 January 2009, a ruling may be issued to apply for the period of 1 July 2008 to 30 June 2011.

    Questions 13 and 14

    The answers to these questions should generally be 'yes'. If not, please provide an explanation.

    Question 15

    The answer to this question should generally be 'no'.

    Section E: Declaration and signature

    Declaration

    If you are applying for your own private ruling, or are applying as a legal personal representative, by signing this form you are declaring that the information contained in this document, and any attached documents, is true and correct.

    If you are an agent, by signing this form you are declaring that:

    • this document and any attached documents have been prepared according to the information supplied by the entity identified in Section A of this form (the entity)
    • you have received a declaration from the entity stating that the information they provided to you to prepare this application is true and correct, and
    • you are authorised by the entity to give this application to the Commissioner of Taxation.
    Attention

    'You' includes a trustee of a trust, a partner in a partnership, public officer, company director.

    'Legal personal representative' means an executor or administrator of a deceased estate, a person holding a general power of attorney, or a trustee of an estate of a person under a legal disability.

    'Agent' includes spouse, relative, friend, or another agent (but not a tax agent or other tax professional) authorised to give this application to the Commissioner of Taxation.

    Please sign and date if you are sending via fax or post or delivering by hand.

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    Name

     

    Signature

     

    Date

     
    Attention

    The Tax Office is authorised by the Taxation Administration Act 1953 to ask for the information on this form. We need this information to help us respond to your private ruling application.

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    How to lodge this form

    Further Information

    You can lodge this application via the Business Portal, or by fax, post or by hand delivery to the Tax Office.

    End of further information

    If you lodge via the Business Portal, you will receive an instant receipt and your application will be actioned faster than if lodged via post.

    If you are lodging by fax or post, use the number or address below.

    Facsimile

    1300 139 011

    Post

    Micro Enterprises and Individuals - Provision of Advice
    PO Box 1130
    Penrith NSW 2740
    Australia

      Last modified: 26 Aug 2009QC 22118