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Edited version of private advice
Authorisation Number: 1052021781053
Date of advice: 31 August 2022
Ruling
Subject: Superannuation fund for foreign residents - withholding tax exemption
Question
Is the Plan excluded from liability to withholding tax on the interest and/or dividend income derived through the Fund from its investments in accordance with paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer
No.
This ruling applies for the following period:
Year ended 30 June 20xx
The scheme commences on:
1 July 20xx
Relevant facts and circumstances
The Fund
The Fund is based in Country X.
The Fund invests entirely on behalf of the Plan.
The Plan is administered by ForCo acting through an employee serving as the Plan Administrator.
The Plan is a defined contribution plan entirely funded by employee contributions. Contributions and distributions flow through the Plan before being invested in the Fund or dispersed to the beneficiaries.
The Fund is made up of units that investors purchase.
The Fund keeps separate accounts for the pension plan which reflect income, growth of value, withdrawals made and/or the redemption of units.
To be a member of the Plan, the member must be an employee (current or former) of ForCo.
The Plan does not have automatic enrolment.
Management of Investments
The Fund acquires shares from a third party and places them with the Custodian.
The ability of the investing plan to access money from the Fund involves the Fund calculating the funds available for distribution upon request from its members through units owned in the investment times based on the Net Asset Value (NAV) on the day of the sale of the units.
The Fund charges its investors that are reflected in the daily NAV and is charged against the capital growth of the investments. Distributions or credits made to the unit holders inclusive of a calculation of the Fund's operating or other costs.
The Fund invests its funds directly on behalf of its own members and does not commingle its funds with any other investor. It has no investment partner and does not invest monies on behalf of any other entity.
Termination of the Fund
There is a mechanism for the Plan to be terminated. However, there is no intention for the plan to be would up or terminated in the near future.
The Fund has provided a statement that it is an indefinitely continuing fund.
Benefits provided
The key benefits provided by the Plan are:
a. Normal retirement: a pension to be paid upon reaching normal retirement age.
b. General and home loans to a maximum or the lesser of the member's vested balance, which are to be approved by the Plan Administrator. General loans have maximum periods lower than home loans. Loans require interest to be repaid, and can be defaulted on.
c. In-service withdrawals: members once they turn y may make in-service withdrawals (in other words, before they separate from employment).
d. Non-hardship withdrawals: non-hardship withdrawals for management employees before they turn y. Non-hardship withdrawals by occupational employees are available but they must be at least y.
e. Hardship withdrawals: financial hardship withdrawals to be approved by the Plan Administrator. Financial needs that may be considered include:
i. medical expenses
ii. purchase of principal residence
iii. tertiary educational assistance for member, their spouse, dependents or a designated beneficiary for up to z months (including room and board expenses)
iv. payments to prevent eviction or foreclosure from the member's principal residence
v. extensive home repairs or renovation in relation to an unforeseen event
vi. extraordinary legal expenses
vii. funeral expenses for member's immediate family, spouse, child, dependent or designated beneficiary.
f. Disability.
g. Death (including Survivorship) Benefits.
Members are eligible for the benefits above if they are a current or former employee of ForCo.
In-service withdrawals would be subject to applicable Country X taxes.
The Plan's record keeper collects employee contributions and distributes benefits to members.
Other relevant facts
The Fund has not and cannot deduct amounts under either the Income Tax Assessment Act 1997 (ITAA 1997) or the ITAA 1936 for amounts paid to it.
The Fund has not been allowed a tax offset or a tax offset is not allowable for an amount that has been paid to it.
The Fund is a Country X resident for tax purposes. The Country X Tax Authority has provided letters stating the Fund is a Country X resident.
The Country X Tax Authority has confirmed that the Plan is a retirement plan.
Income of the Fund is not non-assessable non-exempt income because of:
a. Subdivision 880-C of the ITAA 1997, or
b. Division 880 of the Income Tax (Transitional Provisions) Act 1997.
Australian investments
Neither of the above funds are Australian funds nor Australian unit trusts.
The Fund has invested in Australian equity investments. These equity investments have the following characteristics:
a. All investments are listed on the ASX.
b. The Fund holds less than 10% of the total participation interests in each Australian company, trust or real estate investment trust (REIT).
c. The Fund would hold less than 10% of the total participation interests in each Australian company, trust or REIT in the circumstances detailed in paragraph 128B(3CC)(b) of the ITAA 1936.
d. Neither the Fund, nor any related party of the Fund, has involvement in the day-to-day management of the business of any of the Australian companies, trusts or REITs.
e. Neither the Fund, nor any related party of the Fund, has the right to appoint a director to the Board of Directors of the Australian company or equivalent role in a trust or REIT.
f. Neither the Fund, nor any related party of the Fund, holds the right to representation on any investor representative or advisory committee (or similar) of the Australian company, or equivalent role in a trust or REIT.
g. Neither the Fund, nor any related party, has the ability to direct or influence the operation of the Australian company, trust or REIT outside of the ordinary rights conferred by the equity interest held.
h. The Fund only holds rights to vote in proportion to its equity interest in each Australian company, trust or REIT.
Relevant legislative provisions
Income Tax Assessment Act 1936 paragraph 128B(3)(jb)
Income Tax Assessment Act 1997 section 118-520
Reasons for decision
Broadly, 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.
Further, from 1 July 2019, the extra requirements in subsection 128B(3CA) of the ITAA 1936 must also be met.
The Plan is a non-resident
The Commissioner has determined from the facts and circumstances that the Plan is not a resident of Australia.
Therefore, the Plan satisfies this requirement.
The Plan is a superannuation fund for foreign residents
Section 118-520 of the ITAA 1997 provides:
(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 is 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.
- An indefinitely continuing fund
The Plan was established as a defined contribution benefit plan.
There is a mechanism for the Plan to be terminated. There is no intention for the plan to be would up or terminated in the near future.
There is sufficient evidence to accept that the Plan will continue to operate for an indefinite period of time.
Therefore, the Plan satisfies this requirement.
- 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.
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 establish 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).
Broadly, the Plan provides benefits to members as follows:
The key benefits provided by the Plan are:
a. Normal retirement: a pension to be paid upon reaching normal retirement age.
b. General and home loans that are to be approved by the Plan Administrator. General loans have maximum periods lower than home loans. Loans require interest to be repaid, and can be defaulted on.
c. In-service withdrawals: members once they turn y may make in-service withdrawals (in other words, before they separate from employment).
d. Non-hardship withdrawals: non-hardship withdrawals are available for management employees before they turn y. Non-hardship withdrawals by occupational employees are available but they must be at least y.
e. Hardship withdrawals: financial hardship withdrawals to be approved by the Plan Administrator. Financial needs that may be considered include:
i. medical expenses
ii. purchase of principal residence
iii. tertiary educational assistance for member, their spouse, dependents or a designated beneficiary for up to z months (including room and board expenses)
iv. payments to prevent eviction or foreclosure from the member's principal residence
v. extensive home repairs or renovation in relation to an unforeseen event
vi. extraordinary legal expenses
vii. funeral expenses for member's immediate family, spouse, child, dependent or designated beneficiary.
f. Disability.
g. Death (including Survivorship) Benefits.
Members are eligible for the benefits above if they are a current or former employee of ForCo.
In-service withdrawals would be subject to applicable Country X taxes.
Baker v Federal Commissioner of Taxation,2015 ATC 10-399; [2015] AATA 469 (Baker) is a case that considered foreign funds and whether a US Individual Retirement Account (IRA) was a foreign superannuation fund. An IRA is a savings product which has a number of purposes, one of which is to encourage saving for retirement with favourable tax treatment.
In Baker at paragraph [16], O'Loughlin SM in considering the judgments of Kitto, Taylor and Windeyer JJ in Mahony and Allsop, Stone and Jessup JJ in Cameron Brae Pty Ltd v. Federal Commissioner of Taxation (2007) 161 FCR 468 stated that a trust arrangement that is not a provident fund, benefit fund or retirementfund, that allows for payment of superannuation style benefits and other benefits not permitted by the Supervision Act will not be a superannuation fund. This is a reference to the definition of a superannuation fund, under section 10 of the Superannuation Industry (Supervision) Act 1993 (Cth) (the Supervision Act), which includes, as an element to meet the definition, the need to be a 'provident, benefit, superannuation or retirement fund'.
The decision in Baker was reached due to the broad range of benefits that may be accessed at any time and for multiple purposes that are arguably not for 'provident, benefit, superannuation or retirement' purposes. An IRA is not considered to satisfy the requirements of a 'provident, benefit, superannuation or retirement fund'.
Paragraph 29 of Baker provided:
There does appear, however, to be a fundamental difference between the Australian and USA regimes that are directed to incentivise retirement planning and saving. The USA regime does not appear to have prohibitions on activities that can be undertaken within a concessionally taxed structure intended to incentivise retirement saving, or by those who control those structures, to the same degree as in Australia. ... Importantly, under the USA regime, money can be withdrawn at any time prior to any retirement event at the complete discretion of the IRA holder. Any amount can be released or withdrawn at any time. Retirement income, or superannuation payments or payments in the nature of superannuation payments are but possibilities under the IRA structure rather than what is an essential feature of the structure by reason of limitations in or the scope of the formal terms and conditions of the structure.
Paragraph 32 of Baker went on to state:
While it can readily be accepted that the USA IRA is a method that might be commonly adopted and used to plan and save for retirement income, that such planning and saving is incentivized by means that have their parallels in Australia, that these vehicles and the concessions that are afforded to them if certain behaviors are observed are part of a strategy designed by the USA government to encourage self-provision for and in retirement, the restrictive features required of trusts so as to be superannuation funds for Australian income tax purposes do not accommodate the flexible structures that appear to be promoted in the USA to achieve equivalent purposes in Australia.
Paragraph 34 of Baker concluded by stating that the flexibility of monetary withdrawals from an IRA is such that payments in the nature of superannuation payments from it are but one of a number of possibilities. While there are some differences between the Plan and an IRA plan, the Commissioner considers that the members' opportunity to make hardship and early non-hardship withdrawals of contributions for certain purposes (for example, education or housing loans) from the Plan are analogous to the features that exhibited flexibility in the Baker decision that were determined to be inconsistent with Australian superannuation fund laws.
General and home loans that are to be approved by the Plan Administrator. General loans have maximum periods lower than home loans. Loans require interest to be repaid, and can be defaulted on.
Members can also make non-hardship withdrawals once they turn y (in other words, before they separate from employment). Management employees may make early non-hardship withdrawals before they turn y.
Members may also seek Plan Administrator approval of hardship withdrawals for such purposes as medical, housing, education, emergency repairs, extraordinary legal expenses and funerals.
It is considered that the connection of the withdrawal of funds for the purposes of hardship and early non-hardship withdrawals (especially before a member turns y) are too remote given that the benefits can be accessed at any time (subject to approval) many years before the prescribed age of retirement and may benefit someone who may not be a member. That is, the specific purposes of these withdrawals are too remote from the broad statement of intention of assisting members prepare for retirement or enhancing their post-retirement lifestyle.
Therefore, it is necessary to consider whether the hardship and early non-hardship withdrawals and loans from the Plan are benefits received by members for provident or benefit purposes, and therefore that the fund is a provident or benefit fund.
At a broad level, such a purpose must be to provide a provision against contemplated contingencies or the payment of benefits on some defined occurrence such as sickness, accident, old age or death.
The terms 'provident' and 'benefit' may refer to funds that have features including medical, funeral, sickness, hospital and dental cover. Withdrawals for these reasons are to address a future need or contingency (as in the High Court case of Mahony referred to above). However, these benefits do not include housing loans, hardship (except medical and funeral) or early non-hardship withdrawals. Such withdrawals may assist members with preparing for retirement and enhancing the value of life post-retirement but they only do so in an indirect way and are more related to improving their pre-retirement lifestyle. Hardship withdrawals may also go to the member's children's education, which has no bearing on the member's retirement nor is it strictly for their benefit. While early non-hardship and hardship withdrawals (except medical and funeral) or housing loans may potentially improve the member's lifestyle, they do not address a member's future need or contingency.
Therefore, the statutory definition does not cover hardship (except medical and funeral) and early non-hardship withdrawals or loans.
Plan members have the opportunity to seek approval for a withdrawal from the Plan Administrator for the purposes of a housing loan or hardship withdrawals. Unlike situations where IRAs make up a nominal or ancillary amount of accounts or assets held, potentially every Plan member is eligible to seek hardship and early non-hardship withdrawals or housing loans.
Therefore, for the purposes of subparagraph 118-520(1)(a)(ii) of the ITAA 1997, the Commissioner does not consider the benefits of the Plan align with the sole purpose of providing retirement benefits or benefits in other allowable contemplated contingencies. As such, the Fund is not considered to be a 'provident, benefit, superannuation or retirement fund'.
- Established in a foreign country
The Plan was established in Country X.
Therefore, the Plan satisfies this requirement.
- Was established and maintained only to provide benefits for individuals who are not Australian residents
The Plan was established for the principal purpose to manage and invest the members' savings for their retirement. The employers and their employees reside in Country X.
Therefore, the Plan satisfies this requirement.
- 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 Plan exercises the CM&C of the Plan. The Plan members are not Australian residents.
The Country X Tax Authority has provided letters stating the Fund is a Country X resident.
Therefore, the Plan satisfies this requirement.
- Subsection 118-520(2)
The Plan has not and cannot deduct amounts under either the ITAA 1997 or the ITAA 1936 for amounts paid to it.
The Plan has not been allowed a tax offset or a tax offset is not allowable for an amount that has been paid to it.
Therefore, the Plan satisfies these requirements.
Consists of interest or dividend and/or non-share dividends paid by a company that is a resident
Paragraph 128B(3)(jb) of the ITAA 1936 will only apply to interest, or to dividends and non-share dividends paid by Australian resident companies.
Subsection 128A(3) of the ITAA 1936 is also relevant. It states:
For the purposes of this Division, a beneficiary who is presently entitled to a dividend, to interest or to a royalty included in the income of a trust estate shall be deemed to have derived income consisting of that dividend, interest or royalty at the time when he or she became so entitled.
The operation of subsection 128A(3) of the ITAA 1936 will enable interest, dividend and non-share dividend income paid by an Australian resident company and derived by a trust estate to retain its character in the hands of a beneficiary of that trust estate. Further, the beneficiary will be deemed to have derived the relevant type of income under paragraph 128B(3)(jb) of the ITAA 1936 at the point in time that the beneficiary becomes presently entitled to that income.
In order to be excluded from withholding tax under paragraph 128B(3)(jb) of the ITAA 1936, the interest, dividend and/or non-share dividend income must be derived by a non-resident superannuation fund for foreign residents.
The Fund as trustee of the Plan, with its presently entitled Plan beneficiary, will receive interest, dividend and non-share dividend income from its investments in the entities. These entities are residents of Australia for tax purposes.
Therefore, the Plan satisfies this requirement.
- Conclusion
As all of the above requirements are not satisfied, the Plan does not meet 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
The income of the Plan is not subject to tax in Country X.
The Country X Tax Authority confirmed that the Plan is a retirement plan.
Therefore, the Plan 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) of the ITAA 1936 to apply. Generally, these extra requirements apply to income derived from 1 July 2019.
Relevantly:
• The Plan must satisfy the 'portfolio interest test' in relation to the test entity (subsection 128B(3CC) of the ITAA 1936)
• The Plan must satisfy the 'influence test' (subsection 128B(3CD) of the ITAA 1936) in relation to the test entity, and
• The income cannot otherwise be non-assessable non-exempt income of the Plan because of:
a. Subdivision 880-C of the ITAA 1997, or
b. Division 880 of the Income Tax (Transitional Provisions) Act 1997.
- The Plan 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.
The Fund holds less than 10% of the total participation interests in each Australian company, trust or REIT. Therefore, the Plan hold less than 10% of the total participation interests in each Australian company, trust or REIT. Further, the Plan would hold less than 10% of the total participation interests in each Australian company, trust or REIT in the circumstances detailed in paragraph 128B(3CC)(b) of the ITAA 1936.
The Plan therefore satisfies the 'portfolio interest test' in respect of the Fund's current investments.
- The Plan satisfies the 'influence test'
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
(i) 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 Plan are 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 Plan is able to act in concert with others to determine the identity of a relevant decision-maker in the test entity.
Law Companion Ruling LCR 2020/3 The superannuation fund for foreign residents withholding tax exemption and sovereign immunity (LCR 2020/3) states in paragraph 18 that the phrase 'acting in concert' was considered by Finkelstein J in Papua New Guinea Dockyard Limited v Adams [2005] FCA 413 at [13]:
'Many of the important cases that discuss the meaning of acting in concert are helpfully collected by Barrett J in Bateman v. Newhaven Park Stud Ltd (2004) 49 ACSR 597. These cases show that a person, A, will be acting in concert with another person B, if A engages in conduct (act or omission) in consequence of an agreement or understanding between A and B and the conduct is in pursuance of an objective or purpose which is common to both. It is not as is sometimes suggested necessary to show that the common objective or purpose "has some pejorative element [such as] to circumvent the letter, or perhaps even the spirit, of some other statutory obligation or requirement.'
Whether the relevant entity in acting in concert with others is able to appoint a relevant decision-maker requires an examination of all the relevant facts and circumstances. There must be some form of arrangement or understanding, whether explicit or otherwise, under which they are acting (or have agreed to act) in pursuing a common objective.
Example 2 in LCR 2020/3, describing a situation where two unrelated parties use a common investment manager, and Example 4.7 of the Explanatory Memorandum, demonstrate that the acting in concert requirement with respect to the influence test has a low threshold. Relevantly, both of these examples show that where investors aggregate their interests with other investors (using a common investment manager) and gain rights, and exercise said rights, to appoint decision-makers in the test entity, this is sufficient to find that all investors satisfy the influence test.
Given that the Fund makes the investments on behalf of the Plan, the question would be whether the Plan could, either in part or in whole, or via their trustee Fund, determine the identity of such a relevant decision-maker.
Given the above points, sub-test 1 therefore may also extend to situations where the Plan or the Fund, in their own right, hold 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 Plan either alone or acting in concert as represented by the Fund.
Relevantly, in respect of the investments:
a. All investments are listed on the Australian Securities Exchange (ASX).
b. The Plan and the Fund hold less than 10% of the total participation interests in each Australian company, trust or REIT.
c. The Plan and the Fund would hold less than 10% of the total participation interests in each Australian company, trust or REIT in the circumstances detailed in paragraph 128B(3CC)(b) of the ITAA 1936.
d. Neither the Plan and the Fund, nor any related party of the Plan, has involvement in the day-to-day management of the business of any of the Australian companies, trusts or REITs.
e. Neither the Plan and the Fund, nor any related party of the Plan, has the right to appoint a director to the Board of Directors of the Australian company or equivalent role in a trust or REIT.
f. Neither the Plan and the Fund, nor any related party, holds the right to representation on any investor representative or advisory committee (or similar) of the Australian company, or equivalent role in a trust or REIT.
g. Neither the Plan and the Fund, nor any related party, has the ability to direct or influence the operation of the Australian company, trust or REIT outside of the ordinary rights conferred by the equity interest held.
h. The Plan and the Fund only holds rights to vote in proportion to its equity interest in each Australian company, trust or REIT.
Based upon the above, the Commissioner accepts that the Plan does not have influence of a kind described in subsection 128B(3CD) of the ITAA 1936.
- Otherwise non-assessable non-exempt
The income received by the Plan 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.
Conclusion
The Plan is not excluded from withholding tax in relation to interest, dividend and non-share dividend income derived from its current investments.