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Edited version of private ruling
Authorisation Number: 1011557712189
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Ruling
Subject: Dividend and interest withholding exemption
Questions and answers:
1. Is the trustee of the Plan exempt from income tax on its interest and/or dividend income derived from Australia under paragraph 23(jb) of the Income Tax Assessment Act 1936 (ITAA 1936) for the 200B to 200D income years?
Yes
2. Is the trustee of the Plan excluded from liability to withholding tax on its interest and/or dividend income derived from Australia under paragraph 128B(3)(a) of the ITAA 1936 for 200B to 200D income years?
Yes
3. Is the trustee of the Plan excluded from liability to withholding tax on its interest and/or dividend income derived from Australia under paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 (ITAA 1936) for the 200X to 200Z income years?
Yes
4. Is interest and/or dividend income derived from Australia by the entity not assessable and not exempt income of the trustee under section 128D of the ITAA 1936 for the 200X to 200Z years?
Yes
This ruling applies for the following period:
1 July 2003 to 30 June 2010
Relevant facts:
The applicant has applied for a private ruling regarding exemption from income tax and withholding tax for an overseas trustee of a foreign superannuation fund.
The Plan is a pension plan established as a genuine pension, superannuation and/or retirement fund.
The fund was established in an overseas country.
The fund was established, maintained and applied for the sole purpose of providing superannuation benefits for persons other than persons who would ordinarily be, or become, residents of Australia or residents of a Territory of the Commonwealth.
The central management and control of the fund is carried on outside Australia by persons, none of whom are residents of Australia or resident of a Territory of the Commonwealth.
The fund is not one for which an amount has been set aside, or to which an amount has been paid, by a taxpayer that has been allowed or is allowable as a deduction under any provision of the ITAA 1936 or the Income Tax Assessment Act 1997 (ITAA 1997).
The application includes the following documentation:
· A letter from the relevant taxation authority confirming:
o The fund is a resident of the overseas country for the purposes of taxation in that country.
o The fund is exempt from taxation in the overseas country.
· A tax determination letter
· Pension Plan document
· Certificate of Residency
· Power of Attorney from beneficial owner
· Trustee statement
· Opinion statement
· Financial statements for the relevant income years
Relevant legislative provisions
Income Tax Assessment Act 1936 subsection 6(1)
Income Tax Assessment Act 1936 paragraph 23(jb)
Income Tax Assessment Act 1936 paragraph 128B(3)(a)
Income Tax Assessment Act 1936 paragraph 128B(3)(jb)
Income Tax Assessment Act 1936 section 128D
Reasons for decision
A 'foreign superannuation fund" is defined in subsection 6(1) of the ITAA 1936 as follows:
Foreign superannuation fund means, subject to subsection 6(7A), a provident, benefit, superannuation or retirement fund:
· that was established in a country outside Australia;
· that was established, and is maintained and applied, for the sole purpose of providing superannuation benefits for persons other than persons who are, or would ordinarily be or become, residents of Australia or residents of a Territory (even if pensions are paid out of the fund to the latter persons); and
· the central management and control of which is carried on outside Australia by persons none of whom is a resident of Australia or a resident of a Territory; not being a fund for which an amount has been set aside, or to which an amount has been paid, by a taxpayer that is an amount that has been allowed or is allowable as a deduction, or in respect of which a rebate of tax has been allowed or is allowable, under any provision of this Act.
This Plan was established in the overseas country. It was established, maintained and applied for the sole purpose of providing superannuation benefits for persons other than persons who would ordinarily be, or become, residents of Australia or residents of a Territory of the Commonwealth. The central management and control of the fund is carried on outside Australia by persons none of whom is a resident of Australia or a resident of a Territory. The fund is not one for which an amount has been set aside, by a taxpayer that has been allowed or is allowable as a deduction under any provision of the ITAA 1936 or ITAA 1997.
Therefore, as all requirements of subsection 6(1) of the ITAA 1936 have been satisfied, this Plan is considered to be a 'foreign superannuation fund'.
Paragraph 128B(3)(jb) of the ITAA 1936 (and the former paragraph 23(jb) of the ITAA 1936) states that the income of a provident, benefit, superannuation or retirement fund that, at all times during the year of income, was a foreign superannuation fund, being income that consists of:
· interest; or
· dividends or non-share dividends paid by a company that is a resident;
shall be exempt from income tax.
It is considered that the Plan was a foreign superannuation fund. The Plan is exempt from income tax on any interest and/or dividend or non-share dividends derived from Australia per paragraph 128B(3)(jb) of the ITAA 1936 (and the former paragraph 23(jb) of the ITAA 1936).
Section 128D of the ITAA 1936 (and the former paragraph 128B(3)(a) of the ITAA 1936) exempts interest, dividend income or non-share dividend income received by a foreign superannuation fund from Australian withholding tax where:
· that income is exempt from income tax because of paragraph 128B(3)(jb) of the ITAA 1936 (and the former paragraph 23(jb) of the ITAA 1936); and
· exempt from income tax in the country in which the non-resident resides.
The relevant taxation authority in the foreign country has confirmed the Plan is an approved pension plan in that country and is both a resident for the purposes of that country's taxation and exempt from taxation in the foreign country.
Therefore, the Plan satisfies the conditions of section 128D of the ITAA 1936 (and the former paragraph 128B(3)(a) of the ITAA 1936) and is exempt from Australian withholding tax on interest, dividend or non-share dividend income.
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