Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012380688373

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 fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.

Ruling

Subject: Sovereign immunity

Question 1

Is the foreign country central bank eligible for exemption from Australian income tax including withholding taxes from its Australian investments under the common law principle of sovereign immunity?

Answer

Yes. The foreign country central bank is eligible for exemption from Australian income tax including withholding taxes from its Australian investments under the common law principle of sovereign immunity

Question 2

Does the foreign country central bank qualify as a 'sovereign entity?

Answer

It is not necessary to answer this question. The foreign country central bank's eligibility for an exemption from income taxes is not determined by establishing whether or not the central bank comes within the definition of 'sovereign entity'. Rather, eligibility for an exemption will be determined by the application of the three conditions precedent examined in answer to Question 1

This ruling applies for the following period:

1 July 2009 to 30 June 2016

The scheme commences on:

1 July 2009

Relevant facts and circumstances

The foreign country central bank has provided legislation and annual reports to establish that it is a central bank

Relevant legislative provisions

Taxation Administration Act 1953 subsection 15-15(2).

Reasons for decision

In order to establish whether sovereign immunity applies to exempt Australian income tax including withholding tax, it is necessary to establish the following conditions required in ATOID 2002/45:

Condition 1 - that the person making the investment (and therefore deriving the income) is a foreign government or agency of a foreign government

The foreign country central bank has provided evidence which demonstrates that it is exercising governmental functions and is owned and controlled by the foreign government. As such, the entity will constitute an agency of a foreign government subject to satisfaction of the conditions below.

Condition 2 - that the moneys being invested are and will remain government moneys

The foreign country central bank has provided evidence that the moneys being invested are and will remain government money.

Condition 3 - that the income is being derived from a non-commercial activity

Based on the evidence provided by the foreign country central bank, it is considered that that income is being derived from a non commercial activity.

Conclusion

Accordingly, having satisfied conditions one to three above, the foreign country central bank will qualify for an exemption from Australian income tax including withholding tax derived from its Australian income under the principle of sovereign immunity.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).