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Edited version of your private ruling
Authorisation Number: 1012517488274
Ruling
Subject: Foreign Super Fund - 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 ITAA 1936?
Answer
Yes.
Question 2
Is interest and/or dividend income derived from Australia by the trustee of the overseas based Superannuation Fund not assessable income of the fund under section 128D of the ITAA 1936?
Answer
Yes.
This ruling applies for the following periods:
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 commences on:
1 July 2012.
Relevant facts and circumstances
The applicant has applied for a private ruling for a superannuation fund for foreign residents.
The application includes the following documentation:
· Letter 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.
· A copy of the Trust deed and the rules of the fund which provide details of the establishment of the fund, the benefits provided by the fund, and the rules governing the fund.
· A statement from the trustee of the fund confirming that:
o the fund is an indefinitely continuing fund and a provident, benefit, superannuation or retirement fund,
o the fund was established in a foreign country,
o the fund was established, and is maintained, only to provide benefits for individuals who are not Australian residents,
o the central management and control of the fund is carried on outside Australia by entities none of whom is an Australian resident,
o an amount paid to the fund or set aside for the fund has not been or cannot be deducted under the ITAA 1997 and
o a tax offset has not been allowed or is not allowable for such an amount.
· A copy of the financial statements of the fund for the 2010, 2011 and 2012 financial years.
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
Section 128D of the Income Tax Assessment Act 1936 (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 years ended 30 June 2008 and onwards, 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.
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 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;
(b) a tax offset has been allowed or is allowable for such an amount
Perusal of the rules 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 this definition are met. Accordingly, the interest and/or dividend income of the fund is excluded from withholding tax and is not assessable income.