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Authorisation Number: 1012213145065

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Ruling

Subject: Exemption from income tax/withholding tax

Questions and Answers

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 periods:

Financial year ending 30 June 2012

Financial year ending 30 June 2013

Financial year ending 30 June 2014

Financial year ending 30 June 2015

Financial year ending 30 June 2016

The scheme commences on:

1 July 2011

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 overseas based superannuation fund 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 ITAA 1997 and a tax offset has not been allowed or is not allowable for such an amount.

· A certificate from the tax authorities in the country of residence certifying that the overseas based superannuation fund is exempt from income tax in respect of income from investments and deposits.

· Financial Statements of the entity for the 2009 and 2010 years.

· A copy of the document confirming that entity X and the overseas based superannuation fund entered into a fiduciary management agreement and that entity X is the fiduciary manager for overseas Pension Plan.

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

Paragraph 128B(3)(jb) of the ITAA 1936 excludes interest and dividend income from withholding tax where that income:

· is derived by a non-resident that is a superannuation fund for foreign residents; and

· consists of interest, or consists of dividends or non-share dividends paid by a company that is a resident; and

· is exempt from income tax in the country in which the non-resident resides;

For the financial 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.

The trust deed and fund rules indicate that the overseas based superannuation fund (the fund) has been established to provide pension and superannuation benefits for the members. On the basis of the information provided, it is considered that the fund is a superannuation fund for foreign residents as defined in section 118-520 of the ITAA 1997. The statement from the trustee of the fund also confirms that the requirements of the definition have been met.

The relevant tax authority has certified that the overseas based superannuation fund is a registered pension fund and is exempt from income tax in respect of income in that country.

Accordingly the interest and/or dividend income of the fund is excluded from withholding tax pursuant to paragraph128B(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.