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This edited version has been archived due to the length of time since original publication.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.

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Edited version of your written advice

Authorisation Number: 1012895534011

Date of advice: 3 November 2015

Ruling

Subject: Doctrine of Sovereign Immunity

Question 1

Is the entity immune from income tax or withholding tax on dividend income and capital gains derived from its investment in approved Australian equities under the common law doctrine of sovereign immunity that meet the following conditions:

Answer

Yes

Question 2

Is the entity immune from income tax or withholding tax on trust distributions and capital gains derived from its investment in Australian Real Estate Investment Trusts (REITs) under the common law doctrine of sovereign immunity that meet the following conditions:

Answer

Yes

This ruling applies for the following periods

Income year ended 30 June 2016

Income year ended 30 June 2017

Income year ended 30 June 2018

The scheme commences

During the income year ending 30 June 2016

Relevant facts and circumstances

The entity is a central bank that was established under an act of parliament of the foreign country (the Act) to promote monetary stability and financial stability conducive to the sustainable growth of the economy.

Under the Act, the entity is a statutory body wholly owned by the government.

The investment income earned by the entity will increase the foreign reserves amount held by the entity. It will be reinvested as part of the mandates in managing the country's foreign reserves and/or will be utilised to support general central bank functions.

Australian investments

Australian equities

The entity makes investments in Australian equities by that meet the following conditions:

The entity receives dividend income and will make gains from the disposal of Australian investments that meet all of the above conditions.

Australian REITs

The entity makes investments in Australian REITs that meet the following conditions:

The entity receives trust distributions and will make gains from the disposal of units in the Australian REITs that meet all of the above conditions.

Reasons for decision

The Foreign States Immunities Act 1985 (Immunities Act) is an Australian Commonwealth Act which reflects a more restrictive view of the common law doctrine of sovereign immunity.

The ATO follows the principles delineated in the Immunities Act which represents Australia's restrictive approach when considering sovereign immunity claims to taxation matters.

Pursuant to this approach, an entity claiming sovereign immunity must satisfy three conditions:

If these three conditions are satisfied, it has been the long-standing practice of the ATO to not impose the entity's liability to income tax and withholding tax in respect of ordinary income and statutory income on the basis that the entity has satisfied the common law doctrine of sovereign immunity.

Question 1

Based on the facts provided, the three conditions are satisfied.

Accordingly, the entity is immune from income tax or withholding tax on dividend income and capital gains derived from its investment in approved Australian equities under the common law doctrine of sovereign immunity that meet the following conditions:

Question 2

Based on the facts provided, the three conditions are satisfied.

Accordingly, the entity is immune from income tax or withholding tax on trust distributions and capital gains derived from its investment in Australian REITs under the common law doctrine of sovereign immunity that meet the following conditions:


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