ATO Interpretative Decision
ATO ID 2001/320
Income Tax
Withholding Tax Exemption - Foreign Superannuation FundFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the trustee of a superannuation fund exempt from liability to withholding tax on its interest and/or dividend income derived from Australia under paragraph 128B(3)(a) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
The trustee of the superannuation fund is exempt from liability to withholding tax under paragraph 128B(3)(a) of the ITAA 1936 on its interest and/or dividend income derived from Australian sources.
Facts
The taxpayer superannuation fund, is a 'foreign superannuation fund' in terms of subsection 6(1) of the ITAA 1936 and the trustee is exempt from income tax on interest and/or dividend income derived from Australia by the superannuation fund under paragraph 23(jb) of the ITAA 1936.
The taxpayer superannuation fund is a non-resident and is exempt from income tax in the country in which it is resident. A certificate issued within the last three years by the taxing authority in the country of residence of the fund provided evidence that the fund is exempt from income tax in that country.
Reasons for Decision
The trustee of the superannuation fund is exempt from liability to withholding tax on its interest and/or dividend income derived from Australia under paragraph 128B(3)(a) of the ITAA 1936. This paragraph exempts interest and/or dividend income received by a non-resident from withholding tax where:
- (i)
- that income is exempt from income tax because of paragraph 23(jb) of the ITAA36; and
- (ii)
- exempt from income tax in the country in which the non-resident resides.
The effect of paragraph 23(jb) combined with the subsection 6(1) definition of 'foreign superannuation fund' as well as paragraph 128B(3)(a) means that a foreign superannuation fund which has no connection with Australia other than by virtue of some or all of its funds being invested in Australian interest and/or dividend bearing investments is excluded not only from the ordinary provisions of the ITAA 1936 relating to the taxation of superannuation funds but also - provided that investment income is also exempt in its home country - from withholding tax on interest and dividends.
Date of decision: 3 August 2001
Legislative References:
Income Tax Assessment Act 1936
subsection 6(1)
paragraph 23(jb)
paragraph 128B(3)(a)
ATO ID 2001/334
Keywords
Withholding tax exemptions
Non resident dividend withholding tax
Non resident interest withholding tax
Superannuation funds
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 3 August 2001 | Original statement |
| 16 July 2010 | Archived |