Edited version of private advice

Authorisation Number: 1051791359762

Date of advice: 18 December 2020

Ruling

Subject: Foreign super fund - exemption from income tax/withholding tax

Question

Is the Fund excluded from liability to withhold tax on dividend and interest income derived from its current investments acquired after 27 March 20XX in Australia as listed in the facts in accordance with paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Answer

Yes

This ruling applies for the following period:

1 July 20XX to 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The Fund currently invests in several Australian projects for the benefit of the registered pension plans which it represents.

The Fund will continue to identify potential Australian projects that may be suitable for investment.

The Fund intends to hold these investments on capital account for the receipt of relatively stable income streams (i.e. dividends and/or interest).

Background/creation

The Fund was established as a pension fund scheme with effect from 19XX to provide retirement and death benefits to all eligible employees of a government entity in the Country A, its subsidiaries and associated companies in accordance with the Rules of the Fund (the Rules) and Definitive Trust Deed (Trust Deed).

X Trustee Company Limited is trustee of the Fund and is responsible for the management of the Fund, and in this regard enters into all legal agreements on behalf of the Fund.

The Rules and Trust Deed are scheduled to a deed of variation dated December 20XX as amended by further deeds and resolutions, specifically deeds of variation dated March 20XX, February 20XX and November 20XX.

The Rules and Trust Deed are administered in line with the following Country A legislation:

•         Pension Schemes Act 1993

•         Pensions Act 1995; and

•         Pensions Act 2004.

These acts in their entirety form a part of the facts of this private ruling.

Plan type

The Fund is a defined benefit plan, where both the employer and employee make contributions.

Employee contributions are based on 5% of the employee's contributory pensionable salary. This is adjusted on a pro-rata basis where the employee is employed in a part time capacity. Employer contributions make up the balance needed to meet the costs of the Fund.

As a defined benefit plan, the benefits payable on death, ill-health, termination of service and retirement are specified in Scheme documents.

The Fund has the following features:

a)    Inclusion in the Fund is restricted to the type of employee to which the Fund relates (i.e. a person must be an employee of one of either Principal Employer or of a Participating Employer or former Participating Employer as set out in the Trust Deed and Rules) and is not open to the general public;

b)    Benefits accruing under the Fund are traceable (i.e. the amount contributed by an employee can be determined or the benefits accrued to an employee can be calculated); and

c)    An employee's contribution to the Fund, or accrued benefits under the Fund, are portable to another eligible pension plan (either in the form of a transfer value or a credit for a period of pensionable service performed by an employee).

Plan management

The Fund is managed by the directors of X Trustee Company Limited.

X Trustee Company Limited's role is as follows:

•         To act in the best interests of the Fund's members and beneficiaries

•         To act impartially, prudently and honestly

•         To invest the Fund's assets to obtain the best long-term return without putting the fund at undue risk. Independent specialist investment managers carry out day to day investment on the Trustee's behalf

•         To make sure the fund is administered according to the Trust Deed and rules of the Fund.

The Trustee board consists of x directors and is made up by representatives from the following:

•         the Principal Employer

•         Trade unions; and

•         Other Trustees nominated by members through the Fund Pension Consultative Council, including pensioners or deferred pensioners.

While the Board of the Trustee has responsibility for deciding all policy matters. there are committees in place to carry out the functions of the Board efficiently. To the extent that the exercise of delegated authority is not directly supervised by the Board, it will be supervised by the relevant committee.

The committees comprise either directors of the Trustee, half of whom are nominated by the principal employer and half of whom are nominated by the other representative groups from the Board. The committees are as follows:

•         Investment Committee

The investment committee is responsible for matters concerning equities and bonds, including strategy and the appointment and monitoring of investment managers, investment advisers and the custodian.

•         Alternatives and Liability Hedging Committee

This committee is responsible for matters relating to alternative assets and liability hedging, including strategy, the appointment and monitoring of investment managers and monitoring the overall benchmark for the fund's portfolio.

•         Operations Committee

This committee is responsible for monitoring the Fund's performance under the Administration Agreement and Fund Rules; monitoring quarterly cash flow, income/expenditure and capital expenditure budgets, instructing the secretary of the fund to prepare the brief to professional advisers of the Fund and to monitor their performance and devising the fund's communications strategy.

•         Audit and Risk Committee

The responsibility of this committee is to ensure that the rules relating to finance and corporate governance matters are properly applied; the Fund's financial affairs are properly conducted in accordance with best practice and the Fund's accounting policies; to ensure that there are processes in place for the Fund and the Trustee to comply with the Trust Deed and Fund Rules, legislation, and all internal policies and regulations.

•         Appeals Committee

The responsibility of this committee is to hear appeals as the second stage adjudicator under the Internal Disputes Resolution Procedure.

•         Actuarial Valuation Committee

The responsibility of this committee is to liaise with the actuary and negotiate with the Fund on matters relating to scheme specific funding and actuarial factors for benefit calculations. Rule 43 requires a formal actuarial valuation to be out carried every three years.

•         The Fund Office

The Fund Office is responsible for the day to day administration of the Fund. The Fund Office oversees the payment of pension benefits, ensures that members have the necessary pension information and ensures that the pension interests of members and employers are managed and protected.

The Fund attests that the central management and control is carried on outside Australia.

Purpose:

The purpose of the Fund is the provision of retirement pensions and other benefits for and in respect of employees covered under the Rules.

Membership:

Membership of the Fund as at 31 March 20XX includes employees of the Principal Employer and employees of other (specified) employers.

Existing membership - Existing Members are members who joined the current scheme in 19XX who were members of the previous pension scheme which was in place for Fund employees.

New Members - Members who entered service with one of the participating employers after 19XX are known as New Members. Employees of the participating employers are automatically enrolled as members of the Scheme unless they choose to opt out under the Fund Rules.

Deferred membership - A person is a deferred member in relation to an employment where:

•         The person was previously in service with one of the participating employers;

•         The person is no longer in service in relation to that employment;

•         The person has not started to receive any pension in relation to that employment; and

•         The person has not yet reached the Scheme Pension Age.

Survivor member - A person is a survivor member of the Scheme if that person is entitled to benefits as a surviving partner of an active or deferred member (e.g. on death).

Eligibility:

In order for a person to be eligible for benefits under the Scheme, they must be one of the types of member of the Scheme as set out above.

Contributions:

Employee contributions are made at the contribution rate (based on the member's pensionable pay) from that member's pensionable pay in each employment in which the member is an existing or new member of the Fund.

Benefits:

The fund provides the following benefits:

•         Old age pension

•         Mental health or disability pension

•         Survivor lump sum payments and pension

A member who leaves service at or after the Scheme Pension Age is entitled to Scheme benefits. The annual amount of the pension shall be 1/60th of Pensionable Salary for each year of membership.

A member who has reached normal pension age may elect to defer payment of the retirement pension up to the date the member reaches 75.

The Rules also provide that a member can access their pension on retirement as a lump sum.

If a member leaves service before reaching the Scheme Pension Age, on grounds of ill-health or mental infirmity before the member reaches the normal pension age, they are entitled to an early pension where they are permanently incapable of efficiently discharging the duties of the employment they were engaged in. Benefits available are dependent on length of service.

If a member dies in service, a lump sum of four times their pensionable salary will be paid to a nominated person as set out in the Rules.

If the deceased active member dies leaving a surviving partner, they are entitled to a pension where the member was a member of the scheme at commencement in 19XX. The pension payable shall not be less than 1/60th of the annual average of the member's pensionable salary for the last three years of contributory membership.

If the deceased member was not a member of the Scheme as at 19XX and the member died after 19XX, pension benefits will only be payable to the surviving partner in the following circumstances:

•         Where the surviving partner is not a dependant;

•         The member was not in receipt of benefits from the Scheme when the member and the partner married or entered into a civil partnership; or

•         The surviving partner was not living together with another person as spouses/civil partners.

If the active member dies leaving dependants or eligible children, a pension is payable to either the dependant or the eligible children. The amount payable is subject to the length of time the member was in service for, whether the member was in service and whether the member was in receipt of a pension. To the extent that a pension is also payable to a surviving partner, the pension payable to the eligible child or dependant will be reduced by the amount of the pension payable to the surviving partner.

Portability of benefits:

When an employee leaves the service of a participating employer, that employee is given the option of transferring their pensionable service to another pension plan.

Employees that join the Fund are also given the ability to transfer their pensionable service from another employer.

Central management and control:

The Fund was established in Country A and its head offices are in Country A.

The central management and control of the Fund is carried out in Country A.

Wind up and insolvency:

The Trust Deed states that the Fund shall continue providing benefits to its members for 80 years from the creation of the Fund and for any further period as may be lawful. Further, the Deed and Rules do not specify a date on which the trust must be wound up.

Tax status:

The Fund is a registered pension scheme under section 150(2) of the Finance Act 2004 and as such is exempt from Country A income tax on interest received and from capital gains tax on the proceeds of investments sold.

Australian investments:

The Fund provided a list of its Australian investments.

The Fund has invested in Australian equity investments. These equity investments have the following characteristics:

a.    All investments are listed on the Australian Securities Exchange (ASX).

b.    The Fund holds less than 10% of the total equity interests on issue of each Australian company or trust.

c.     The Fund has no involvement in the day to day management of the business of any of the Australian companies or trusts.

d.    The Fund has no right to appoint a director to the Board of Directors of the Australian company or equivalent role in a trust.

e.    The Fund has no right to representation on any investor representative or advisory committee (or similar) of the Australian company, or equivalent role in a trust.

f.      The Fund has no ability to direct or influence the operation of the Australian company or trust outside of the ordinary rights conferred by the equity interest held.

g.    The Fund only holds rights to vote in proportion to its equity interest in each Australian company or trust.

The Fund has invested in an Australian debt investment.

The Fund's investment into the debt investment is approximately 2% of the total value.

The debt investment from which income will be ordinary derived in the form of interest has the following characteristics:

a.    The Fund holds less than 10% of the total equity interests on issue of each Australian debt issuer.

b.    The Fund has no involvement in the day to day management of the business of any the Australian debt issuers.

c.     The Fund has not acquired the right to appoint a director to the Board of Directors of any issuing Australian debt issuer.

d.    The Fund has not acquired the right to representation on any investor's representative or advisory committee (or similar) of the Australian Debt Issuer.

e.    The Fund has no ability to direct or influence the operation of the Australian debt issuer outside of the ordinary rights conferred by the debt interest held.

f.      The Fund has no voting rights in respect of the debt investments held.

g.    The Fund has not entered into its debt investments with Australian organisations for the main purpose of obtaining an advantage by virtue of the operation of Article 11 of the Country A Convention.

Relevant legislative provisions

Income Tax Assessment Act 1936 paragraph 128B(3)(jb)

Reasons for decision

Summary

The Fund is excluded from liability to withhold tax on dividend and interest income derived from its current investments acquired after 27 March 2018 in Australia as listed in the relevant facts and circumstances in accordance with paragraph 128B(3)(jb) of the ITAA 1936.

Detailed reasoning

Section 128B of the ITAA 1936 imposes liability to withholding tax on income derived by a non-resident that consists of dividend income (subsection 128B(1) of the ITAA 1936), interest income (subsection 128B(2) of the ITAA 1936) as well as other income prescribed in that section.

Subsection 128B(3) of the ITAA 1936 notes that section 128B of the ITAA 1936 will not apply to prescribed categories of income. Relevantly, paragraph 128B(3)(jb) provides an exclusion from withholding tax for interest, dividends and non-share dividends derived by a superannuation fund for foreign residents (subject to the satisfaction of certain conditions).

For the exclusion to apply, the interest, dividend and/or non-share dividend income must be:

•         derived by a superannuation fund for foreign residents (as defined in section 118-520 of the ITAA 1997), and

•         exempt from income tax in the country in which the superannuation fund for foreign residents arise.

Further, from 1 July 2019, the extra requirements in subsection 128B(3CA) must also be met.

Superannuation fund for foreign residents

The Fund is not a resident of Australia for tax purposes. Therefore, the Fund satisfies this requirement.

Superannuation fund for foreign residents is a defined term in the ITAA 1936. Subsection 6(1) of the ITAA 1936 states:

superannuation fund for foreign residents has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997.

Subsection 995-1(1) of the ITAA 1997 sets out the following:

superannuation fund for foreign residentshas the meaning given by section 118-520.

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 Meaning of superannuation fund for foreign residents

(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.

(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.

1.    An indefinitely continuing fund

The term 'indefinitely continuing fund' is not defined in either the ITAA 1997 or the ITAA 1936. Therefore, it should be given its ordinary meaning subject to the context in which it appears and having regard to any relevant case law authorities.

The Australian Oxford Dictionary, 2004, Oxford University Press, Melbourne defines the term 'fund' as; 1: a permanent stock of something ready to be drawn upon... 2: a stock of money, especially one set apart for a purpose.

In Scott v. FC of T (No 2) (1966) 14 ATD 333; (1966) 10 AITR 290 (Scott), Windeyer J expressed the view that 'fund' in the context of 'superannuation fund' ordinarily meant 'money (or investments) set aside and invested, the surplus income therefrom being capitalised'. Windeyer J's views in Scott were cited with approval by Hill J in Walstern Pty Ltd v. Commissioner of Taxation (2003) 138 FCR 1; 2003 ATC 5076; (2003) 54 ATR 423 who stated that 'for present purposes, the point is the need for "money" or "other property" to constitute a fund'.

The general view is that an indefinitely continuing fund does not have to continue forever, but rather that the governing rules should not fix an express termination date.

The rules of the Fund do not provide for winding up at a defined point in time. The Rules currently state that the fund shall continue for at least 80 years and for as long as a period as is lawful. On that basis, the Fund is accepted to be indefinitely continuing.

2.    A provident, benefit, superannuation or retirement fund

The phrase 'provident, benefit, superannuation or retirement fund' under subparagraph 118-520(1)(a)(ii) of the ITAA 1997 is not defined in either the ITAA 1936 or the ITAA 1997.

ATO Interpretative Decision ATO ID 2009/67 Income Tax: Superannuation fund for foreign residents (ATO ID 2009/67) provides guidance on the meaning of the phrase 'provident, benefit, superannuation or retirement fund':

None of the four descriptors 'provident', 'benefit', 'superannuation' or 'retirement fund' in subparagraph (a)(ii) of the definition of 'superannuation fund for foreign residents' in section 118-520 of the ITAA 1997 are defined. The terms have, however, been the subject of judicial consideration.

The courts have held that for a fund to be a 'provident, benefit, superannuation or retirement fund', the fund 's sole purpose must be to provide superannuation benefits, that is, benefits to a member upon the member reaching a prescribed age or upon their retirement, death or other cessation of employment (Scott v. FC of T (No 2) (1966) 14 ATD 333; (1966) 10 AITR 290, per Windeyer J; Mahony v. FC of T (1967) 14 ATD 519, per Kitto J; Walstern Pty Ltd v. Commissioner of Taxation (2003) 138 FCR 1; 2003 ATC 5076; (2003) 54 ATR 423, per Hill J and Cameron Brae Pty Ltd v. Federal Commissioner of Taxation (2007) 161 FCR 468; 2007 ATC 4936; (2007) 67 ATR 178, per Stone and Allsop JJ).

The above extract establishes that for a fund to qualify as a provident, benefit, superannuation or retirement fund, it must have the sole purpose of providing retirement benefits or benefits in other allowable contemplated contingencies (such as death, disability or serious illness).

It is accepted that the Fund is a "provident, benefit, superannuation or retirement fund" on the basis that:

•         The Fund's sole purpose is to provide the relevant participant employees money benefits upon their reaching a prescribed age (i.e. immediate annuities, deferred annuities, etc as explained above);

•         The Fund can be described as "provident" on the basis that it provides money benefits upon particular contingencies (e.g. death, ill-health and retirement);

•         The Fund provides benefits upon an employee's retirement or death or other cessation of employment, including to survivors and children of the employee;

•         The terms of the Fund (i.e. the Trust rules) are consistent with a superannuation fund and the terms are strictly adhered to (evidenced by the fact that the terms of the Fund are enacted in law and violation of them could lead to criminal or civil sanctions);

•         The amounts collected by the Fund are not used for any purposes other than providing benefits to participants, former participants and their beneficiaries under the Fund and paying the reasonable expenses of administering the Fund; and

•         Contributions are made into the Fund by the participating employer (i.e. the local authority employers), but in this case not exclusively.

Therefore, the Fund satisfies this requirement.

3.    Established in a foreign country:

The Fund has been established in accordance with the Rules of the Fund and the Definitive Trust Deeds and is a registered pension scheme under Country A legislation under the Finance Act 2004. Furthermore, the trustee and administrator of the Fund attests that the Fund has been established by a country outside Australia.

Therefore, the Fund satisfies this requirement.

4.    Was established and maintained only to provide benefits for individuals who are not Australian residents:

The Fund was established to provide superannuation benefits to the following employees, employed in the Country A:

•         Employees of the Principal Employer; and

•         Employees of other local Country A government entities (as provided).

The Fund does not provide benefits to Australian residents. Accordingly, the Commissioner accepts that Fund was established and is maintained only to provide benefits for individuals who are not Australian residents.

5.    Central management and control (CM&C):

Paragraphs 20 and 21 of Taxation Ruling TR 2008/9 Income tax: meaning of 'Australian superannuation fund' in subsection 295-95(2) of the Income Tax Assessment Act 1997 (TR 2008/9) states:

20. The CM&C of a superannuation fund involves a focus on the who, when and where of the strategic and high level decision making processes and activities of the fund. In the context of the operations of a superannuation fund, the strategic and high level decision making processes includes:

•         formulating the investment strategy for the fund;

•         reviewing and updating or varying the fund's investment strategy as well as monitoring and reviewing the performance of the fund's investments;

•         if the fund has reserves - the formulation of a strategy for their prudential management; and

•         determining how the assets of the fund are to be used to fund member benefits.

21. The other principal areas of operation of a superannuation fund that form part of the day-to-day or operational side of the fund's activities will not constitute CM&C. These activities do not form part of the CM&C of the fund because they are not of a strategic or high level nature. Rather, these activities are of a more formalistic or administrative nature. Examples of such activities include the acceptance of contributions that are made on a regular basis, the actual investment of the fund's assets, the fulfilment of administrative duties and the preservation, payment and portability of benefits.

The central management and control of the Fund is carried out by the board of directors of the X Trustee Company Limited which is made up of x directors as follows:

•         X Trustees are nominated by the Principal Employer, x of which must be members of the fund.

•         X Trustees are nominated by the trade unions; and

•         X Trustees are nominated by members through the Fund Pension Consultative Council, including x who are pensioners or deferred pensioners.

Furthermore, the Trustee and administrator attests that the central management and control of the Fund is carried on outside Australia.

The Commissioner is satisfied in these circumstances that the central management and control of the Fund is in Country A and is carried out by individuals who are not Australian residents. Therefore, the Fund satisfies this requirement.

6.    Subsection 118-520(2):

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 the Act; or

b)    a tax offset has been allowed or is allowable for such an amount.

No amount paid to the Fund or set aside for the Fund has been or can be deducted (and no tax offset has been allowed or is allowable for such an amount) under the ITAA 1936 or ITAA 1997.

Therefore, the Fund satisfies these requirements.

Conclusion

As all of the above requirements are satisfied, the Fund meets the requirements of being a superannuation fund for foreign residents as defined by section 118-520 of the ITAA 1997.

The Fund is exempt from income tax in the country in which the non-resident resides:

As per the facts provided (including a statement from HMRC) the Fund is generally exempt of Country A tax by virtue under section 150(2) of the Finance Act 2004. Therefore, the interest and dividend income derived by the Fund will be exempt from tax in the Country A.

Therefore, the Fund satisfies this requirement.

Subsection 128B(3CA) of the ITAA 1936:

The Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Act 2019 introduced extra requirements that must be met for paragraph 128B(3)(jb) to apply. Generally, these extra requirements apply to income derived from 1 July 2019.

Relevantly:

•         The fund must satisfy the 'portfolio interest test' in relation to the test entity (subsection 128B(3CC)

•         The fund must satisfy the 'influence test' (subsection 128B(3CD) in relation to the test entity, and

•         The income cannot otherwise be non-assessable non-exempt income of the Fund because of:

a.    Subdivision 880-C of the ITAA 1997, or

b.    Division 880 of the Income Tax (Transitional Provisions) Act 1997.

1.    The fund satisfies the 'portfolio interest test'

Subsection 128B(3CC) states:

A superannuation fund satisfies the portfolio interest test in this subsection in relation to the test entity at a time if, at that time, the total participation interest (within the meaning of the Income Tax Assessment Act 1997) the superannuation fund holds in the test entity:

(a) is less than 10%; and

(b) would be less than 10% if, in working out the direct participation interest (within the meaning of that Act) that any entity holds in a company:

(i) an equity holder were treated as a shareholder; and

(ii) the total amount contributed to the company in respect of non-share equity interests were included in the total paid-up share capital of the company.

As per the facts, the Fund does not hold more than 10% of the total participation of any of the entities listed in the 'Australian Investments' section.

In these circumstances, the Commissioner is satisfied that the total participation interest the Fund holds in the test entities:

•         is less than 10% pursuant to paragraph 128B(3CC)(a) at all relevant times; and

•         would be less than 10% in the circumstances detailed in paragraph 128B(3CC)(b) at all relevant times.

The Fund therefore satisfies the 'portfolio interest test' in respect of its Australian Investments listed in the relevant facts of this Ruling.

2.    The fund satisfies the 'influence test'

Subsection 128(3CD) states:

A superannuation fund has influence of a kind described in this subsection in relation to the test entity at a time if any of the following requirements are satisfied at that time:

(a) the superannuation fund:

(i) is directly or indirectly able to determine; or

(ii) in acting in concert with others, is directly or indirectly able to determine;

the identity of at least one of the persons who, individually or together with others, make (or might reasonably be expected to make) the decisions that comprise the control and direction of the test entity's operations;

(b) at least one of those persons is accustomed or obliged to act, or might reasonably be expected to act, in accordance with the directions, instructions or wishes of the superannuation fund (whether those directions, instructions or wishes are expressed directly or indirectly, or through the superannuation fund acting in concert with others).

As such, there are two distinct sub-tests within the influence test.

Sub-test 1 of the influence test, as contained in paragraph 128B(3CD)(a), assesses whether the Fund is able to determine the identity of at least one of the persons who, individually or together with others, makes or is reasonably expected to make, decisions comprising the control and direction of the test entity's operations. This includes situations where the fund is able to act in concert with others to determine the identity of a relevant decision-maker in the test entity.

Sub-test 1 also extends to situations where the fund, in its own right, holds the ability to approve or veto decisions which go to the control or direction of the test entity.

Sub-test 2 of the influence test, as contained in paragraph 128B(3CD)(b), assesses whether at least one of the relevant decision-making persons of the test entity is accustomed or obliged to act, or might reasonably be expected to act, in accordance with the directions, instructions or wishes of the fund.

Relevantly, in respect of the investments listed in the relevant facts and circumstances of this Ruling:

•         Neither the Fund, nor any related party, is involved in the day to day management of the business of any of the Australian companies or trusts.

•         Neither the Fund, nor any related party, has the right to appoint a director to the Board of Directors of the Australian company, Australian debt issuer or equivalent role in a trust.

•         Neither the Fund, nor any related party, holds the right to representation on any investor representative or advisory committee (or similar) of the Australian companies or trusts.

•         Neither the Fund, nor any related party, has the ability to direct or influence the operation of the Australian companies or trusts outside of the ordinary rights conferred by the equity interest held.

•         The Fund only holds rights to vote in proportion to its equity interest in each of the Australian companies or trusts.

Accordingly, the Fund does not have influence of a kind described in subsection 128(3CD) of the ITAA 1936 in respect of these investments. The Fund does not have capacity to influence (either directly or indirectly) the day-to-day management of the operations of their investments.

Consequently, the Commissioner accepts that the Fund does not have influence of a kind described in subsection 128B(3CD).

3.    Otherwise non-assessable non-exempt

The income received by the Fund will not be non-assessable non-exempt income because of Subdivision 880-C of the ITAA 1997 or Division 880 of the Income Tax (Transitional Provisions) Act 1997.

Income derived by the Fund would not be otherwise treated as not assessable and not exempt income by virtue of the above provisions. Accordingly, the above exclusion should not apply to exclude the Fund from entitlement to the withholding tax exemption for superannuation funds for foreign residents.

Conclusion

The Fund is excluded from withholding tax in relation to interest, dividend and non-share dividend income derived from its current investments acquired after 27 March 20XX in Australia as listed in the facts of this ruling.