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Edited version of private ruling
Authorisation Number: 1011746489380
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fac sheet has more information.
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Ruling
Subject: Withholding tax exemption
Question 1
Is the trustee for the fund 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)?
Answer:
Yes.
Question 2
Is interest and/or dividend income derived by the trustee for the fund non-assessable income of the fund under section 128D of the ITAA 1936?
Answer:
Yes.
This ruling applies for the following period:
Income year ending 30 June 2011
Income year ending 30 June 2012
Income year ending 30 June 2013
Income year ending 30 June 2014
Income year ending 30 June 2015
The scheme commences on:
1 July 2010
Relevant legislative provisions
Income Tax Assessment Act 1936 Paragraph 128B(3)(jb)
Income Tax Assessment Act 1936 Section 128D
Income Tax Assessment Act 1997 Section 118-520
Relevant facts and circumstances
The applicant has applied for a private ruling for the superannuation fund for foreign residents.
The application included the following documentation:
· A statement from the manager of the fund confirming that the entity is an indefinitely continuing fund and a provident, benefit, superannuation or retirement fund; the entity was established in a foreign country; the entity 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 ITAA 1997 and a tax offset has not been allowed or is not allowable for such an amount.
· A letter from the tax authority, confirming that the fund is exempt from income tax on its interest and dividend income in that country.
· A copy of the reference to the rules of the fund.
Reasons for decision
For the years ended 30 June 2008 and onwards, paragraph 128B(3)(jb) of the ITAA 1936 excludes interest and dividend income from withholding tax where that income:
· is derived by a non-resident that is a superannuation fund for foreign residents; and
· consists of interest, consists of dividends or non-share dividends paid by a company that is a resident; and
· is exempt from income tax in the country in which the non-resident resides.
The term 'superannuation fund for foreign residents' is defined in section 118-520 of the Income Tax Assessment Act 1997 (ITAA 1997) as follows:
118-520(1)
A fund is a superannuation fund for foreign residents at a time if:
(a) at that time, it is:
i) an indefinitely continuing fund; and
ii) a provident, benefit, superannuation or retirement fund; and
(b) it was established in a foreign country; and
(c) it was established, and is maintained at that time, only to provide benefits for individuals who are not Australian residents; and
(d) at that time, its central management and control is carried on outside Australia by entities none of whom is an Australian resident.
118-520(2)
However, a fund is not a superannuation fund for foreign residents if:
(a) an amount paid to the fund or set aside for the fund has been or can be deducted under this Act; or
(b) a tax offset has been allowed or is allowable for such an amount.
Perusal of the rules indicates that the fund satisfies the definition of a superannuation fund for foreign residents for the purposes of section 118-520 of the ITAA 1997.
The statement by the manager of the fund also confirms that the requirements of this definition are met. Accordingly the interest and/or dividend income of the fund is excluded from withholding tax and is not assessable income.
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