Private rulings for sovereign immunity – supporting information

As set out in ATO ID 2002/45, in essence, we provide relief from Australian tax for income derived from the non-commercial activities of foreign governments and their instrumentalities. That is, income derived within Australia from the non-commercial activities of foreign governments (including kingdoms and monarchies, and regional, local and provincial government) and of entities that form part of foreign governments (which may include a company wholly owned by a foreign government) is not subject to Australian Tax.

Generally, we will only consider a private ruling application in relation to this approach if the applicant satisfies us that no other income or withholding tax exemptions are available under the Income Tax Assessment Act 1936, Income Tax Assessment Act 1997 or any applicable International Tax Agreement.

Each case turns on its own facts and it is not possible to provide a ‘bright-line’ test for determining whether tax relief applies. That said, a portfolio holding in a company (that is, a holding of 10 per cent or less of the equity in the company) will generally be accepted as a non-commercial activity.

This document is to be used as a guide to assist you in preparing your private ruling application about an exemption from Australian income tax and/or withholding tax for Australian sourced income and gains from non-commercial sovereign investments. The list of documents and information detailed in this document are those that we usually require to consider your private ruling application. It is not an exhaustive list of documents and information considered by the Commissioner, as the information required will depend on the circumstances of the entity and Australian sourced income and gains for which an entity is seeking exemption.


Identify the entity seeking to claim the exemption for non-commercial sovereign investments and provide the legislation and other founding documents by which the entity was established.


It is important that you identify the correct entity in your ruling request.

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Commonwealth laws, including Division 355 of Schedule 1 of the Taxation Administration Act 1953, regulate the way Australian Government agencies collect, use, disclose, secure, provide access to and correct information about the tax affairs of an entity, and information that identifies, or is reasonably capable of being used to identify, that entity. We may not be able to issue a private ruling if doing so would result in us breaching these laws. For example, making a private ruling in relation to a custodian’s obligation to withhold tax from payments made to a sovereign investor may require us to consider the affairs of the sovereign investor. This may prevent us issuing a ruling to the custodian.


  • The governing rules of the entity, including its investment mandate.
  • Evidence that the entity making the investment is a foreign government agency1 or is wholly owned by one or more foreign governments or their agencies, such as a flow-through entity (eg a trust) that benefits only foreign government agencies.
  • Evidence that the moneys being invested are and will remain government moneys.
  • A detailed description of the functions and responsibilities of the entity and, if applicable, its Australian investment vehicles.
  • Details of how the entity is managed and/or controlled by the foreign government.
  • An explanation or diagram to show that the membership interests in the entity are wholly and beneficially owned by the foreign government.
  • Information to confirm that the entity was established with foreign government money.
  • A detailed description of the purpose of the investments or activities that derived the income for which the exemption is being claimed (the scheme).
  • An explanation of all steps undertaken to implement the scheme and a clear outline of the size of the investments in both percentage holding and dollar value terms.
  • Details of all types of income and gains the entity has derived and is expecting to derive from the scheme, including interest, dividends, rent, sales income and capital gains.
  • A detailed diagram that describes the flow of the scheme's funds. The diagram should clearly show the source of the scheme's funds and how the Australian-sourced income or gains derived by the entity and/or its Australian investment vehicles will ultimately become funds of the foreign government.
  • Documents (including an English translation of all constituent legislation and/or governing documents) to establish that the funds invested are and will remain the funds of the entity (and ultimately the foreign government) that is deriving all income and/or gains from the scheme. This is not satisfied where, for example, the funds include non-government contributions and are held for the benefit of members of a government pension fund. Moneys held for the benefit of pension members cannot be described as being, and remaining, government moneys.2
  • Details of the entity's other investments in Australia.3
  • If the investment is to be (or has been) approved by the Foreign Investment Review Board, details of whether there is a requirement for the investment to be taxed on the same basis as operations by other commercial entities, and any other conditions imposed in relation to taxation.
  • If you are applying for a private ruling on behalf of another entity, evidence that you are authorised by the entity to act on their behalf for the purposes of the application.


  • Whether the entity is a foreign government agency or wholly owned by a foreign government agency as defined under subsection 995-1(1) of the Income Tax Assessment Act 1997.
  • Whether the entity performs activities to support the general functions of the foreign government (that is, whether the entity is funded and financed solely with moneys that the government has at its disposal to fulfil its general functions).
  • Whether income from the scheme is used to fund and support general foreign governmental functions.
  • Why the scheme is considered to be a commercial operation or activity, such as a commercial, trading, business, professional or industrial or like transaction.
    • As a guide, the factors that may be taken into account include (but are not limited to) the following
      • the size (in dollar value and percentage terms) of the direct and indirect investment (such as membership and/or debt interests) and the extent of voting interests in the entity invested in (a small interest would generally be indicative of an interest that is non-commercial in nature);
      • the degree of actual or potential influence able to be exercised in respect of the financial, operating and policy decisions made in respect of the entity, such as the appointment of senior management (having influence of this kind would be indicative of engaging in a commercial activity even if it falls short of ownership or control). Influence may exist, for example, where the entity is represented on the board of directors (if applicable) of the corporation in which it has invested.

If the information and documents listed above are not provided as part of your private ruling application, there may be a delay in making your private ruling or the Commissioner may decline to rule.

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1 As a guide, refer to ‘foreign government agency definition’ in subsection 995-1(1) of the Income Tax Assessment Act 1997.2 Interest, dividends and non-share dividends paid to certain non-resident entities that are treated as tax exempt in their countries of residence, are exempt from withholding tax under paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936.3 Whether an investment is a commercial activity is determined on an investment-by-investment basis as opposed to requiring an overall assessment of all of the entity’s investments in Australia. However, consideration may be given to the overall activities of the entity in so far as it provides context to a particular investment.
    Last modified: 26 Aug 2014QC 23991