• Exemption from withholding tax for foreign super funds – supporting information

    Here's a list of the documents and information we usually need to process a private ruling request from a foreign super fund asking for an exemption from withholding tax on interest and dividend income derived from Australia by the fund for foreign residents. If you provide supporting information this will reduce the time it takes us to process your request.

    If you want to apply for a private ruling to request an exemption, you need to:

    • complete and submit the relevant private ruling application form (for tax professionals or not for tax professionals)
    • provide the supporting information listed below.

    Note: Australian tax may still be payable on any income derived from an Australian source which is not interest and/or dividend income. If this is the case, an Australian income tax return will generally be required to be lodged for that income (but not for payments subject to final withholding tax).

    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 requesting an exemption includes the following:

    • a copy of a certificate or letter from the tax authority in the country where the fund is resident, confirming that the fund 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. 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
      • Note: If the fund is not exempt from income tax on its interest and/or dividend income in its home country, a withholding tax exemption under paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 cannot be granted and section 128D of that Act will not apply
       
    • A copy of the trust deed and rules (if any) for the fund, detailing the establishment, operating rules, the superannuation benefits and entitlements provided.
    • A statement from the trustee of the fund advising that at the time of making this statement
      • the fund is an indefinitely continuing fund and a provident, benefit, superannuation or retirement fund
      • the fund was established in a foreign country
      • the fund 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 Income Tax Assessment Act 1997
      • a tax offset has not been allowed or is not allowable for such an amount
       
    • A copy of the entity's most recently completed annual financial reports.
    • If available, a copy of any publication, brochure or pamphlet issued to the entity's members explaining the entity and benefits available, that has been issued within two years of the date the ruling is requested.

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

    • 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.
    • 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.
    • 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.
      • Note: 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 Income Tax Assessment Act 1936 cannot be granted and section 128D of that Act will not apply.
       
    • 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.
    • 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 Income Tax Assessment Act 1997
      • a tax offset has not been allowed or is not allowable for such an amount
       
    • A copy of the mostly recently completed annual financial reports for the master/group trust and each participating fund.
    • 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, that has been issued in the . Any such publication, brochure or pamphlet should have been issued within two years of the date the ruling is requested.

    Suggested wording

    The following provides suggested wording for key questions on the private ruling application form.

    Issues

    The applicant requests that the Commissioner address the following issues in the ruling.

    • 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?
    • 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:

    • 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?
    • 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?

    Your opinions and references

    You are not expected to provide a legal argument on the issues. However, the following is suggested wording:

    • 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.

    Tax periods you're seeking the private ruling for

    You must use the Australian financial/tax year period, which runs from 1 July to 30 JuneYou 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.

    Next steps:

      Last modified: 11 Jul 2017QC 22118