| Disclaimer This edited version has been archived due to the length of time since original publication.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 private advice
Authorisation Number: 1012609395044
Ruling
Subject: foreign pension Fund - withholding
Questions and answers
1 Is the trustee of the Master Trust excluded from liability to withholding tax on the interest and dividend income derived from from Australia under paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Yes.
2 Is interest and/or dividend income derived by the trustee of the Master Trust non-assessable income of the fund under section 128D of the ITAA 1936?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2007
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
Year ended 30 June 2017
Year ended 30 June 2018
The scheme commenced on:
1 July 2006
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
The applicant has applied for a private ruling for the superannuation fund for foreign residents.
The application includes the following documentation:
• A copy of a statement from the trustee of the Master Trust confirming that the fund is an indefinitely continuing fund and a provident, benefit, superannuation or retirement fund, was established in a foreign country, was established and is maintained only to provide benefits for individuals who are not Australian residents, the central management and control of the fund is carried on outside Australia by entities none of whom is an Australian resident, an amount paid to the fund or set aside for the fund has not been or cannot be deducted under the Income Tax Assessment Act 1997 (ITAA 1997) and a tax offset has not been allowed or is not allowable for such an amount.
• Letter from the tax authorities of the overseas country, certifying that the Master Trust is a registered pension fund and is exempt from tax in respect of interest and dividend income in that country.
• A link to the most recent financial reports for the Master Trust.
• A declaration from the trustee that the Master Trust is a superannuation fund for non-residents.
• A copy of the trust deed which provides details of rules and benefits available to the members.
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.
Reasons for decision
The term 'foreign superannuation fund' is defined in subsection 6(1) of the ITAA 1936 as follows:
'foreign superannuation fund' means a provident, benefit, superannuation or retirement fund:
(a) that was established in a country outside Australia;
(b) 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
(c) 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.
Perusal of the rules indicates that the fund satisfies the definition of a foreign superannuation fund for the purposes of subsection 6(1) of the ITAA 1936.
For the financial year ended 30 June 2007, paragraph 128B(3)(jb) of the ITAA 1936 excludes interest and dividend income from withholding tax where that income:
i. is derived by a non-resident that is a foreign superannuation fund; 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.
As mentioned above, it is considered that that the Master Trust is a foreign superannuation fund as defined in subsection 6(1) of the ITAA 1936. The statement by the trustee of the fund also confirms that the requirements of this definition are met. In addition, the certification from the tax authorities of the overseas country of residence confirms that the fund is exempt on its interest and dividend income there. Accordingly, the interest and/or dividend income of the fund is excluded from withholding tax pursuant to paragraph 128B(3)(jb) of the ITAA 1936.
Section 128D of the ITAA 1936 provides that interest and dividend income that is excluded from withholding tax pursuant to paragraph 128B(3)jb) of the ITAA 1936 is not assessable income.
For the financial year ended 30 June 2008 and onwards, the term 'superannuation fund for foreign residents' is defined in section 118-520 of the ITAA 1997 as follows:
(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 fund 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.
(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.
The trust deed and fund rules indicate that the Master Trust has been established to provide pension and superannuation benefits for the members. On the basis of the information provided, it is considered that the funds are superannuation funds for foreign residents as defined in section 118-520 of the ITAA 1997.
The statements from the trustee of the Master Trust also confirm that the requirements of the definition have been met. The tax authorities in the country of residence of the fund have certified that the Master Trust is exempt from income tax in respect of income from investments and deposits.
Accordingly the interest and/or dividend income of the Master Trust is excluded from withholding tax and is not assessable income.
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).
