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  • Sovereign immunity – supporting information


    Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2019 (the Bill) received royal assent on 5 April 2019.

    Schedule 4 to the Bill codifies and limits the scope of the ATO's administrative practice in respect of sovereign immunity. Division 880 of the Income Tax Assessment Act 1997 will replace the ATO's administrative practice on 1 July 2019.

    This web page is currently under review and will be updated in due course.

    If you are intending to lodge an application for a private binding ruling with a requested ruling period beyond 30 June 2019 please contact Please note the progress of your application may be delayed as the Commissioner considers the amendments made by the Bill.

    Here's a list of the documents and information we need to process a private ruling request claiming sovereign immunity in relation to certain income. If you provide supporting information this will reduce the time it takes to process your request.

    If you want to apply for a private ruling about claiming sovereign immunity, you need to:

    Note: Check first whether your question is answered on our website. Sovereign immunity is an international law doctrine that exempts certain non-commercial income derived in Australia by foreign governments from Australian tax. Generally, we will only grant tax relief under sovereign immunity if we are satisfied 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.

    There is not a stand-alone test for determining whether tax relief applies. However, a portfolio holding in a company (that is, a holding of 10% or less of the equity in the company) will generally be accepted as a non-commercial activity.

    See also:

    Supporting information

    Note: If you've previously provided us with any of the information listed below, you don't need to provide it again.

    The information we need for a private ruling about a claim for sovereign immunity includes the following. Because the decision will depend on the circumstances of the entity and the income or gains for which an entity is seeking exemption, this list may not be exhaustive:

    • details of the entity seeking to claim the exemption for non-commercial sovereign investments and the legislation and other founding documents by which the entity was established
    • the governing rules of the entity, including its investment mandate
    • evidence that the entity making the investment is a foreign government agency (as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997) or is wholly owned by one or more foreign governments or their agencies, such as a flow-through entity (for example, 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.
    • details of the entity's other investments in Australia
    • 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
    • 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 you are applying for a private ruling on behalf of another entity, you must also provide evidence that you are authorised by the entity to act on their behalf for the purposes of the application.

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      Last modified: 26 Apr 2019QC 23991