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Edited version of private ruling
Authorisation Number: 1011481391125
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Ruling
Subject: Exemption from Income tax/Withholding tax
Question 1
Is the trustee of the overseas based superannuation 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 of the overseas based superannuation fund non-assessable income of the fund under section 128D of the ITAA 1936?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ending 30 June 2011
Year ending 30 June 2012
The scheme commences on
1 July 2007
Relevant facts and circumstances
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 overseas based superannuation fund (the fund), confirming that the fund is an indefinitely continuing fund and a provident, benefit, superannuation or retirement fund, was established in an overseas country, 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 copy of a certificate from the tax authorities in the country of residence of the fund, certifying that the fund is a registered pension fund and is exempt from income tax in respect of income from investments and deposits in that country.
Copies of annual report and accounts for the relevant years.
A copy of the definitive deed and rules indicating the rules and details of 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 118-520.
Reasons for decision
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 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;
For the years ended 30 June 2008 and onwards, 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 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.
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 of the fund 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 trustee of the fund also confirms that the requirements of the definition have been met.
The certification from the tax authorities in the country of residence of the fund confirms that the fund is a registered pension fund and is exempt from income tax on its income from investments and deposits in that country.
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) is not assessable income.