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

    Note:

    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 3 to the Bill limits the withholding tax exemption for superannuation funds for foreign residents by introducing additional requirements which must be satisfied (see subsection 128B(3CA) of the Income Tax Assessment Act 1936). The amendments made by the Bill take effect from 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 PGIAdvice@ato.gov.au. Please note the progress of your application may be delayed as the Commissioner considers the amendments made by the Bill.

    Here is a list of the documents and information we usually need to consider a private ruling request from a foreign superannuation fund seeking an exemption from withholding tax on interest and dividend income derived from Australia. If you provide supporting information this will usually reduce the time it takes us to consider your request.

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

    Note: In circumstances where an exemption is available, 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 tax return will generally be required to be lodged for that income (but not for payments subject to final withholding tax).

    Supporting information

    Information we need to consider a private ruling request includes the following:

    • A copy of the trust deed and rules (if any) for the fund, detailing the establishment, operating rules, the super benefits and entitlements provided. This must be provided in English.
    • Details of any legislation which regulates the fund in its country of residence. If this is not publically available in English, an English version must be provided.
    • Either:      
      • Evidence confirming the fund is exempt from income tax on its interest and dividend income in the country of residence. For example, evidence of being a registered pension scheme in the country of residence, and evidence that a registered pension scheme is exempt under the relevant legislation, or
      • A copy of a certificate or letter from the tax authority in the country where the fund is a 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 statement from the fund, or evidence supporting that      
      • the fund was established in a foreign country
      • the central management and control of the entity is carried on outside Australia by entities none of whom is an Australian resident
      • a contribution 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.
       
    • The total dollar value of the fund's Australian investments for which an exemption is sought and the expected rate of return on that investment.
    • If available, the super fund's website details or 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. This must be provided in English.

    If the application relates to a master/group trust or indirect investment into Australia, Early Engagement is recommended. All relevant information about the structure and entities in the structure will be required. This includes any deeds or agreements relevant to the entity making the investment.

    Contact PGIAdvice@ato.gov.au for further information on Early Engagement.

    Example ruling questions

    The following provides suggested wording for the questions to be answered in the private ruling.

    Issues

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

    • Is the XYZ Pension Fund 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 XYZ Pension Fund not assessable and not exempt income under section 128D of the ITAA 1936?

    Next step:

    Send completed form and supporting documentation to PGIAdvice@ato.gov.au

      Last modified: 26 Apr 2019QC 22118