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Edited version of private ruling
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Ruling
Subject: Superannuation fund for foreign residents
Question
Is the foreign superannuation fund eligible for exemption from dividend and interest withholding taxes on income derived in Australia under paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 ('the Act')?
Answer
Yes.
Facts
The fund was established in the taxpayer's country of residence to provide retirement, disability, and death benefits to certain employees.
Relevant legislative provisions
Income Tax Assessment Act 1936
Subsection 6(1).
Paragraph 128B(3)(jb)
Section 128D.
Income Tax Assessment Act 1997
Section 118-520
Subsection 995-1(1)
Reasons for decision
Paragraph 128B(3)(jb) of the ITAA 1936 exempts interest and dividend income received by a non-resident from withholding tax where:
income that
i. is derived by a non-resident that is a superannuation fund for foreign residents and
ii. consists of interest, or consists of dividends or non-share dividends paid by a company that is a resident;: and
iii. is exempt from income tax in the country in which the non-resident resides.
The foreign entity is a 'non-resident' as defined in subsection 6(1) of the ITAA 1936.
The fund was established in the taxpayer's country of residence and is a superannuation fund for foreign residents under section 118-520 of the Income Tax Assessment Act 1997 (ITAA 1997) and a superannuation fund for foreign residents under the definition of that term in subsection 995-1(1) of the ITAA 1997.
Section 118-520(1) requires that 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.
Documents and website information provided by the foreign entity indicates that the fund satisfies the definition of a superannuation fund for foreign residents
Accordingly, the fund qualifies for exemption from withholding tax pursuant to paragraph 128B(3)(jb) of the ITAA 1936.
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