Edited version of private advice

Authorisation Number: 1051852810659

Date of advice: 21 June 2021

Ruling

Subject: Withholding taxes

Question

Is the Fund excluded from liability to withholding tax on its interest, dividend and non-share dividend income derived in respect of its current investments in Australia under paragraph 128B(3)(jb) of the ITAA 1936?

Answer

Yes

This ruling applies for the following periods:

1 July 20XX to 30 June 20XX

The scheme commences on:

18 January 20XX

Relevant facts and circumstances

Background

1.    The Fund is a public employee retirement system established on 1 July XXXX outside of Australia.

2.    The association is administered by Entity A to provide service retirement, disability, death and survivor benefits for employees and other participating agencies under legislation. The Fund is governed by legislation and regulations adopted by Entity A.

3.    The service retirement benefit is a defined benefit pension, which provides a fixed, pre-established benefit for members at retirement. The defined benefit pension is based on a statutory formula.

4.    Entity A has adopted an investment policy, which provides the framework for the management of the Fund's investments. This policy establishes the Funds investment policies, objectives and defines the principal duties of Entity A.

5.    The Investment Program is guided by the investment policies and supported by Entity A's resolutions, procedures and other policies.

Entity A

6.    Entity A is responsible for the general management of the Fund. Entity A maintains the sole and unconditional authority and fiduciary responsibility for the Investment Program.

Description of the Fund

Membership:

7.    An employee becomes a member of the Retirement Plan following employment in an eligible position. Membership is mandatory for most employees in permanent positions, working half-time or more, with the exception of certain employees. A number of employees are specifically excluded from membership by Entity A's regulations.

8.    New members entering the system on or after 1 January 20XX, are considered B members.

9.    Retirement benefit contributions begin after membership. All active, eligible employees contribute to the retirement system.

10.  There are two broad categories of membership, those being C Members and D Members. C Members are employed by location. D Members are employed in a particular industry.

Contributions:

11.  During a member's employment they contribute a percentage of their pay each pay period through automatic payroll deductions which are submitted to the Fund and posted to their retirement account.

12.  The percentage amount is considered their contribution rate, which is determined each year by the Funds actuary. The contribution rate for members is based on two factors, being the members employer and their retirement tier.

13.  As D Members generally retire at an earlier age than C Members, their contribution rate is higher to ensure an average retirement annuity is provided at age 50, rather than age 55 for C Members.

14.  Contributions are made through monthly, pre-tax or post-tax payroll deductions. Pre-tax deduction amounts are taken out of the members pay before taxes are withheld. The tax normally paid on these amounts is deferred until the member begins to draw a retirement benefit or receives a lump sum payout.

15.  B Members have a limit on the amount of pensionable compensation that can be used in the calculation of retirement benefits. The members salary can exceed these limits, but salary above those amounts will not count towards their retirement benefit and members will not make contributions to their retirement system on amounts earned over these limits.

Retirement Benefits:

16.  C Members are eligible to retire at age 50 with at least xx years of retirement service credit or at age 70 regardless of service or after 30 years of service regardless of age. B Members are eligible to retire at age 52 with at least xx years of retirement service credit, or at age 70 regardless of service.

17.  Members accrue service in Tiers. Benefits are calculated under a formula depending on the tier.

Benefits:

18.  Other potential benefits available to members include:

a.    Service connected and non-service connected disability retirement.

b.    A death benefit to be paid to the surviving spouse, dependent child or designated beneficiary.

c.     A survivor benefit to an eligible spouse and/or the member's eligible dependent children consisting of either a survivor pension and/or lump sum payment.

Interest on Account Balance:

19.  Interest is credited on members contributions every 30 June and 31 December. Each member has a separate retirement account where the interest is credited.

20.  The interest rate is at the discretion of Entity A.

Termination of Membership:

21.  The termination of a member's membership in the Fund occurs when a member is no longer employed by an employer who participates in the Fund.

22.  If a member formally terminates their membership they can either have a refund or defer their membership. The deferment of their membership means that the funds in their account remain with the Fund earning interest.

23.  If a member elects a refund, their retirement account will be closed by the withdrawal or rolling over of all of the contributions and interest they made while they were a member of the Fund. They will no longer be entitled to a benefit from the Fund including a disability benefit in the future.

24.  If a member's contributions were made pretax, they will owe income tax on the distributions, unless they make a direct rollover of funds into another tax deferred retirement account. The member may also be subject to additional tax if the member is under the age of 59.5, unless they separated from service after the age of 55.

25.  If the member requests a refund, it will not include contributions made by their employer on their behalf.

Rollover:

26.  A member can rollover their benefit by transferring their contributions and interest from one qualified plan into another qualified retirement plan. A qualified retirement plan is enacted under legislation.

Returning to Work (Before Retirement)

27.  If a member is rehired by a participating employer after they terminated their employment, they will rejoin the Fund unless they are rehired in an ineligible position.

28.  If the member took a refund when they left, they can either re-deposit the contributions and interest (including the interest the funds would have earned during their absence from membership) they withdrew, which will re-establish their retirement account and their original service credit.

29.  The member can also choose to not re-deposit the contributions and interest which will result in their service credit restarting from the date they rejoin the Fund.

Reciprocity:

30.  Members of the Fund may be eligible for the benefits of reciprocity. Reciprocity is an agreement between public defined benefit retirement systems to allow members to move from one employer to another employer within a specific time limit without losing valuable privileges related to their retirement benefits. There is no transfer of funds or service credit between retirement systems, instead the member becomes a member of both systems.

Service Credit:

31.  Service credits allow members to purchase time that can be added to the years of service used for their retirement benefit calculation. Service credits increase the members monetary benefit but does not count towards retirement eligibility. When a member retires, all accumulated sick leave counts as service credit, with one hour of unused sick leave equating to one hour of service credit.

Other Information

32.  The Fund provided a letter to the Commissioner dated XX stating:

a.    The Fund is an indefinitely continuing fund;

b.    The Fund was established in a country other than Australia;

c.     The Fund was established and is maintained only to provide benefits for individuals who are not Australian residents;

d.    The Fund's central management and governance by Entity A is carried on outside of Australia by those who are not Australian residents;

e.    No amount paid to the Fund can be deducted under the Income Tax Assessment Act (ITAA) of 1997 or ITAA 1936, since Section 128B(3) of ITAA 1936 applies;

f.      No tax offset would be allowable for an amount paid to the Fund, either under ITAA 1997 or domestically in Country A, since the Fund is a tax-exempt entity;

g.    The income of the fund is not non-assessable non-exempt income of the Fund because subdivision 880-C of ITAA 1997 applies. The Fund does not hold membership interests in Australian entities, the income of which would be non-assessable non-exempt.

33.  The Fund is a trust forming part of a pension qualified under legislation, which is exempt from Country A taxation under Section X. The Fund is a resident of Country A for purposes of Country A taxation. The Fund is therefore exempt from income tax.

Investments in Australia

34.  The Fund has investments in Australian equities and debt interests. The Australian equity investments of the Fund has the following characteristics:

a.    The equity investment is listed on the ASX.

b.    The fund holds less than 10% of the total equity interests on issue of the Australian company in which it invests.

c.     The Fund has no involvement in the day to day management of the business of the Australian company.

d.    The Fund has no right to appoint a director to the Board of Directors of the Australian company.

e.    The Fund has no right to representation on any investor representative or advisory committee (or similar) of the Australian company.

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

g.    The Fund does not have the ability to direct or influence the operation of the company, or otherwise provide the Fund with anything that would constitute influence under subsection 128B(3CD) of the ITAA 1936.

35.  The Fund will receive interest income from Australian debt interests, along with dividend income from interests in companies that are residents of Australia for tax purposes.

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

Question

Is the Fund excluded from liability to withholding tax on its interest, dividend and non-share dividend income derived in respect of its investments under paragraph 128B(3)(jb) of the ITAA 1936?

Summary

The Fund is excluded from liability to withholding tax on interest, dividend and non-share dividend income derived from its investments in accordance with paragraph 128B(3)(jb) of 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) of the ITAA 1936 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.

The Fund is a non-resident

The Fund is not a resident of Australia for tax purposes. The Fund was established outside Australia, and its management is also based outside Australia.

Therefore, the Fund satisfies this requirement.

The Fund is a superannuation fund for foreign residents

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 residents has 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;

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

Consequently, for the Fund to be considered a superannuation fund for foreign residents for the purposes of paragraph 128B(3)(jb) of the ITAA 1936, it must be established that:

• the Fund is an indefinitely continuing fund
• the Fund is a provident, benefit, superannuation or retirement fund
• the Fund was established in a foreign country
• the Fund was established and maintained only to provide benefits for individuals who are not Australian residents
• The central management and control of the Fund is carried on outside of Australia by entities none of whom are Australian residents
• No amount paid to the Fund or set aside for the Fund has been or can be deducted under the ITAA 1997, and
• No tax offsets have been allowed or would be allowable for an amount paid to the Fund or set aside for the Fund.

The Fund is 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 Fund is governed by legislation, Entity A's regulations and investment policy. There is no indication that the Fund is to be wound up in the near future. Its annual reports state that it is in a position to meet its ongoing obligations to members and their beneficiaries.

There is sufficient evidence to accept that the Fund will continue to operate in accordance with the relevant governing legislation, Entity A's regulations and the Fund will continue indefinitely to meet the obligations to pay benefits under the legislation and Entity's A regulations.

Further, the Fund provided a letter to the Commissioner dated XX, which states that the Fund is an indefinitely continuing fund.

Therefore, the Fund satisfies this requirement.

The Fund is 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 1997 or the ITAA 1936. However, the phrase has been subject to judicial consideration.

In Scott, the High Court examined the terms 'superannuation fund' and 'fund'. Justice Windeyer stated at ATD 351; AITR 312; ALJR 278 that:

... I have come to the conclusion that there is no essential single attribute of a superannuation fund established for the benefit of employees except that it must be a fund bona fide devoted as its sole purpose to providing for employees who are participants money benefits (or benefits having a monetary value) upon their reaching a prescribed age. In this connexion "fund", I take it, ordinarily means money (or investments) set aside and invested, the surplus income there from being capitalised.

In a later case, Mahoney v. Commissioner of Taxation (Cth) (1967) 41 ALJR 232; (1967); 14 ATD 519; 10 AITR 463 (Mahoney case), the High Court took a similar view as in Scott, Justice Kitto expressed the view at ALJR 232; (1967); ATD 520; AITR 464 that:

All that need be recognised is that just as 'provident' and 'superannuation' both referred to the provision of a particular kind of benefit - in the one case a provision against contemplated contingencies, and in the other case a provision, to arise on an employee's retirement or death or other cessation of employee, of a subvention for him or his estate or persons towards whom he may have stood in some kind of relation commonly giving rise to a legal or moral responsibility - so 'benefit' must have meant a benefit, not a general sense, but characterised by some specific future purpose.

The court found that the expression takes its meaning from past usage and the meaning of the several expressions must be arrived at in light of their ordinary usage. As such, the term 'benefit' requires a purpose narrower than conferring benefits in a completely general sense. The benefit must be characterised by some future purpose. Likewise, a provident fund must not refer to the provision of funds in a general sense but must relate to a provision against contemplated contingencies.

Both of the above mentioned cases emphasise that the benefits must be provided for a specific purpose and require that there is a connection between the benefit received and the provision by the fund for retirement or death of a member or against 'contemplated contingencies', such as death, disability or serious illness.

The Fund is a retirement system established to provide service retirement, disability, death and survivor benefits to members. The Fund is a defined benefit retirement plan which provides a fixed, pre-established benefit for members at retirement. The defined benefit is calculated using a statutory formula.

The Fund meets this obligation by providing benefits to members as follows:

1. Service retirement
2. Disability retirement
3. Death and Survivor benefits

As both the key objective of the Fund and the operation of the Fund have the sole purpose of providing retirement benefits, the Commissioner accepts that the Fund is considered to be a 'provident, benefit, superannuation or retirement fund'.

Therefore, the Fund satisfies this requirement.

The Fund was established in a foreign country

The Fund was established on 1 July XXXX outside of Australia. Therefore, the Fund was established in a foreign country.

Therefore, the Fund satisfies this requirement.

The Fund was established and maintained only to provide benefits for individuals who are not Australian residents

The Fund was established outside of Australia to provide service retirement, disability, death and survivor benefits for employees and other participating agencies.

Accordingly, the Fund is a superannuation fund for employees and employees of other participating agencies who are not Australian residents.

It is considered that the possibility of a very small number of members being returned residents or becoming Australian residents after ceasing eligible employment is incidental and should not be taken to conclude that the Fund, in this case, has not been established and is not maintained only to provide benefits for non-residents, based on the rules and operation of the Fund.

Therefore, the Fund satisfies this requirement.

The Fund's central management and control is carried on outside Australia by entities none of whom is an Australian resident

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 in respect of the central management and control (CM&C) of a superannuation fund:

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.

Furthermore, paragraphs 10 and 11 of Taxation Ruling TR 2018/5 Income tax: central management and control test of residency (TR 2018/5) states:

10. Central management and control refers to the control and direction of a company's operations. It does not refer to a physical location in which the control and direction of a company is located and may ultimately be exercised in more than one location.

11. The key element in the control and direction of a company's operations is the making of high-level decisions that set the company's general policies and determine the direction of its operations and the type of transactions it will enter.

The Fund is a pension plan established outside of Australia which is administered by Entity A. The operation of the Fund is governed by legislation, regulations, procedures and policies adopted by Entity A.

The day-to-day administration of the Fund is delegated to the Chief Executive Officer and a full-time staff of approximately X employees.

Entity A is composed of non-residents of Australia and all of the decisions are undertaken outside Australia. This is supported by the fact that:

• The CEO, Chief Investment Officer and Entity A are all non-residents.
• All the board meetings are held outside of Australia and significant management and investment decisions are undertaken outside of Australia.

Based on these facts, it is reasonable to conclude that the central management and control of the Fund is exercised outside of Australia by entities that are not Australian residents.

Therefore, the Fund satisfies this requirement.

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

Pursuant to subsection 118-520(2) of the ITAA 1997, 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.

As the contributors to the Fund are based outside Australia and make contributions in respect of the employment undertaken outside Australia, the contributions to the Fund are neither eligible for deductions nor allowed as offsets under the ITAA 1936 or ITAA 1997. The Fund has also confirmed that no amount paid to the Fund can be deducted under ITAA 1936 or ITAA 1997.

Therefore, the Fund satisfies this requirement.

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 for the purposes of subparagraph 128B(3)(jb)(i) of the ITAA 1936.

The income, consisting of interest, dividend or non-share dividend income, is derived by the Fund

Subsection 128B(3CA) of the ITAA 1936, along with paragraph 128B(3)(jb) of the ITAA 1936 requires the superannuation fund for foreign residents to derive the interest, dividends or non-share dividends paid by Australian resident companies.

The Fund invests directly into Australia and receives interest and dividend income directly from its Australian investments. It will, therefore, derive the relevant income for the purposes of subsection 128B(3CA) of the ITAA 1936 and paragraph 128B(3)(jb) of the ITAA 1936.

Therefore, the Fund will satisfy this requirement.

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

The Fund is exempt from Country A income tax under section X of the legislation, as it is a trust forming part of a pension qualified under section X.

Further, the Fund provided a letter to the Commissioner confirming that the Fund is tax exempt.

Therefore, the Fund satisfies this requirement.

Assets acquired from 1 July 2019 onwards

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) of the ITAA 1936 to apply from 1 July 2019 onwards. These extra requirements apply only to assets which were acquired after 27 March 2018.

Relevantly:

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

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

iii.            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.

The Fund satisfies the 'portfolio interest test'

Subsection 128B(3CC) of the ITAA 1936 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.

Subsection 128B(3CB) defines the test entity to be either the entity that paid the interest, dividends or non-share dividends or, if subsection 128A(3) of the ITAA 1936 applies in relation to a resident trust estate, that trust estate.

Subsection 995-1(1) of the ITAA 1997 defines total participation interest to have the meaning given by section 960-180 of the ITAA 1997, which states:

An entity's total participation interest at a particular time in another entity is the sum of:

(a) the entity's *direct participation interest in the other entity at that time; and

(b) the entity's *indirect participation interest in the other entity at that time.

A 'direct participation interest' that the Fund will have in a test entity is defined in the table in subsection 960-190(1) of ITAA 1997 and depends on what type of entity the other entity is.

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

• is less than 10% pursuant to paragraph 128B(3CC)(a) of the ITAA 1936 at all relevant times; and
• would be less than 10% in the circumstances detailed in paragraph 128B(3CC)(b) of the ITAA 1936 at all relevant times.

The Fund therefore satisfies the 'portfolio interest test' in respect of its current investments.

The Fund does not have influence of a kind described in subsection 128B(3CD) of the ITAA 1936 in relation to the test entity at the time the income was derived

Subsection 128B(3CD) of the ITAA 1936 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) of the ITAA 1936, 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) of the ITAA 1936, 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:

(a)  The equity investment is listed on the ASX.

(b)  The Fund holds less than 10% of the total equity interests on issue of the Australian company in which it invests.

(c)   The Fund has no involvement in the day to day management of the business of the Australian company.

(d)  The Fund has no right to appoint a director to the Board of Directors of the Australian company.

(e)  The Fund has no right to representation on any investor representative or advisory committee (or similar) of the Australian company.

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

(g)  In addition to the above, the Fund does not have the ability to direct or influence the operation of the company, or otherwise provide the Fund with anything that would constitute influence under subsection 128B(3CD) of the ITAA 1936.

Consequently, the Commissioner accepts that the Fund does not have influence of a kind described in subsection 128B(3CD) of the ITAA 1936.

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

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.

The Fund therefore satisfy this condition in respect of its current investments.

Conclusion

As the Fund has met both the pre-existing and extra requirements under of paragraph 128B(3)(jb) of the ITAA 1936 in relation to assets acquired after 27 March 2018, the Fund is excluded from withholding tax in relation to interest, dividend and non-share dividend income derived from its current investments.