Private ruling: Withholding Tax
Date of advice: 3 December 2025
Published: 27 January 2026
Ruling period: Year ended 30 June 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Does subparagraph 4d) of Article 10 of the Convention between Australia and the Swiss Confederation for the Avoidance of Double Taxation with respect to Taxes on Income, with Protocol [2014] ATS 33 (Swiss Convention) apply to the dividend income paid by Australian resident companies with respect to the Australian investments held by the FCP and its Sub-Fund, such that the dividend income shall not be taxed in Australia? | A1: Yes

Relevant facts and circumstances: 1. The FCP is a contractual umbrella fund of the "other funds for traditional investments" type (referred to as "umbrella fund") and has been established in accordance with Art. 25 et seqq. in conjunction with Art. 68 et seqq. and Art. 92 et seqq. of the Swiss Federal Act on Collective Investment Schemes of 23 June 2006 (CISA). 2. The legal relationship between the investor, the fund management company and the custodian bank, is governed by the present fund contract and the applicable provisions of the legislation on collective investment schemes. 3. Under the FCP Fund Contract, FCP and its Sub-Fund do not have separate legal personalities, are fiscally transparent and are not subject to tax in Switzerland. The fund management company 4. The fund management company manages the sub-funds at its own discretion and in its own name, but for the account of the investors. It decides in particular on the issue of units, the investments and their valuation. It calculates the net asset values of the sub-funds and determines the issue and redemption prices of units as well as distributions of income. It exercises all rights associated with the umbrella fund and sub-funds. 5. The fund management company and its agents are subject to the duties of loyalty, due diligence and disclosure. They act independently and exclusively in the interests of the investors. They implement the organisational measures that are necessary for proper management. They account for the collective investment schemes they manage and provide information on all fees and costs charged directly or indirectly to investors and on compensation received from third parties, in particular commissions, discounts or other financial benefits. 6. The fund management company may merge individual sub-funds with other sub-funds or with other investment, convert the individual sub-funds to a different legal status of collective investment scheme, or dissolve the individual sub-funds in accordance with the FCP Fund Contract. The custodian bank 7. The custodian bank is responsible for the safekeeping of sub-funds assets. It handles the issue and redemption of fund units as well as payment transfers on behalf of the sub-funds. The custodian bank is responsible for operating the sub-funds' accounts and safekeeping accounts, but may not independently dispose of their assets. 8. The custodian bank is not responsible for the choice of investments which the fund management company makes in accordance with the investment regulations. 9. The custodian bank ensures that, in the case of transactions relating to the sub-fund assets, the counter value is transferred within the usual time limit. It notifies the fund management company if the counter value is not remitted within the usual time limit and, where possible, requests reimbursement for the asset item concerned from the counterparty. The sub-funds 10. The FCP is divided into the following sub-funds: 11. This ruling request relates only to the X1 Sub-Fund as it is the only sub-fund of the FCP that holds Australian investments. The Plans 12. The FCP offers two plans, (collectively, The Funds): 13. The Funds both invest in a dedicated pension fund, governed under the framework of a Swiss investment foundation as outlined in Art. 48 BVG and Art. 80ff of the Swiss Civil Code. The Fund's exclusive mandate is to manage and invest assets strictly for the provision of occupational pension benefits to employees, ensuring that all investments serve this sole purpose. 14. The regulation of The Funds are subject to strict statutory and supervisory oversight. The dedicated pension funds are FINMA-approved collective investment schemes pursuant to the Collective Investment Schemes Act (CISA). 15. The Funds may offer supplementary pension protection, but its assets cannot be used for statutory or typical employer-paid benefits. Employer benefits are limited to those set for employees in retirement, disability, or death. Discretionary benefits are only allowed for employees or survivors in involuntary hardship. 16. The income of the FCP and the Sub-Fund are considered to be the income of the Funds. Pension Scheme 1 17. Pension Scheme 1 is dedicated to providing both mandatory and supplementary occupational pension benefits in accordance with the Swiss Federal Act on Occupational Old Age, Survivors' and Disability Pension Plans of 25 June 1982 (BVG), thereby ensuring protection for employees, employers, and their respective beneficiaries in the event of old age, disability, or death. Pension Scheme 2 18. Penson Scheme 2 extends the scope of the occupational pension provision by offering solutions beyond the statutory minimum requirements, including specialized arrangements for self-employed individuals without personnel. Eligibility 19. Eligibility for admission to The Funds pension foundations is governed by the provisions of the Swiss Federal Act on Occupational Old Age, Survivors' and Disability Pension Plans (BVG) and its implementing regulations. 20. Affiliation requires that the employer be formally associated with The Funds. Employees are mandatorily insured for risks related to disability and death commencing on 1 January following their birthday, and are mandatorily insured for retirement benefits beginning on 1 January following their birthday, provided their annual salary meets or exceeds the minimum threshold defined by Article 7 BVG. Voluntary insurance may be provided under specific conditions stipulated in the Foundation's regulations, and self-employed persons may be admitted subject to the statutory requirements. The eligibility criteria for both adhere strictly to these legal parameters. Administration 21. The Funds both invest in a dedicated pension fund, governed under the framework of a Swiss investment foundation as outlined in Art. 48 BVG and Art. 80ff of the Swiss Civil Code. The Fund's exclusive mandate is to manage and invest assets strictly for the provision of occupational pension benefits to employees, ensuring that all investments serve this sole purpose. 22. The regulation of The Funds are subject to strict statutory and supervisory oversight. The dedicated pension fund is a FINMA-approved collective investment scheme pursuant to the Collective Investment Schemes Act (CISA). Contributions 23. Employers and employees must contribute to the pension fund by law (BVG). Self-employed persons can also participate voluntarily, contributing directly to the fund. The "FOSS" reserve fund is exempt: it does not require contributions from any party, as it serves as an endowment. All contributions support pension-related benefits only. New Members 24. The Funds are open to contributions and new members. 25. Exempt from this is the "FOSS". Mechanisms for The Funds to be wound up or terminated 26. Pension Plans: Termination of The Funds is governed by internal guidelines, ensuring dissolution procedures comply with legal requirements and entitlements are distributed appropriately. 27. The winding up of the FCP, if applicable, will follow acc. to Art 96 CISA: The investment fund will be wound up: a. in the case of an indefinite term, by termination of the fund management company or the custodian bank; b. in the case of a certain term, by the passage of time; c. by order of FINMA: 1. in the case of a certain term, prematurely for good cause and at the request of the fund management company and the custodian bank, 2. if the minimum assets are not reached, 3. in the cases referred to in Article 133 et seq. Available benefits across The Funds 28. Retirement benefits, withdrawal on termination of employment (note that money in this case moves from The Funds to a differing account that can only be accessed when an appropriate event takes place (such as reaching the appropriate age)), and withdrawals for housing were listed as key benefits available to members of The Funds in the ruling application. 29. Medical benefits do not apply, with the exception to cases of disability. 30. Retirement, disability, death or withdrawal for housing are events that must occur in order for a member to be able to access their benefits. 31. Benefits are paid out as either as a lump sum or as a monthly rent-payment. 32. Generally, the age of 60+ needs to be reached before members are able to access their benefits. 33. The Funds derive dividend income from Australian shares that are listed on the ASX. 34. For the period between the ruling period, the percentage of equity owned in each of the Australian investments held by the Sub-Fund will always remain below 10%. 35. The Funds do not carry on a business through a permanent establishment situated in Australia and do not perform independent personal services from a fixed base in Australia. 36. The Australian resident companies that pay dividends from the investments held through the FCP and its Sub-Fund are not dual residents of both Australia and Switzerland, pursuant to paragraph 1 of Article 4 of the Swiss Convention.

Relevant legislative provisions: Convention between Australia and the Swiss Confederation for the Avoidance of Double Taxation with respect to Taxes On Income, with Protocol [2014] ATS 33 Article 10 .

Reasons for decision: Summary: FCP is considered to be a person who is a resident of a Contracting State and is therefore subject to the Swiss Convention. Dividends paid from investments in Australian resident companies held through FCP and its Sub-Fund meet the requirements of subparagraph 4d) of Article 10 of the Swiss Convention and as such, shall not be taxed in Australia. | Detailed Reasoning - Detailed reasoning: Subsection 128B(1) of the ITAA 1936 provides that, subject to certain exclusions, section 128B of the ITAA 1936 will apply to income derived by a non-resident that consists of a dividend paid by an Australian resident company (franked dividends are specifically excluded from the operation of section 128B by paragraph 128B(3)(ga) of the ITAA 1936). Subsection 128B(4) of the ITAA 1936 provides that a person who derives dividend income to which section 128B of the ITAA 1936 applies, is liable to pay withholding tax on that dividend income. The withholding tax rate applicable is generally 30% of the dividend amount (section 7 of the Income Tax (Dividends, Interest and Royalties Withholding Tax) Act 1974 ). Unfranked dividends derived by the taxpayer from Australian resident companies are therefore subject to withholding tax. However, in determining liability to Australian tax on Australian source income derived by a non-resident, it is necessary to consider not only the income tax laws but also any applicable Convention or Double Taxation Agreement contained in the International Tax Agreements Act 1953 (Agreements Act). Section 4 of the Agreements Act incorporates that Act with the ITAA 1936 and the Income Tax Assessment Act 1997 (ITAA 1997) so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except for some limited provisions). Withholding tax payable in respect of dividends paid to non-residents is an Australian income tax that is covered by the Swiss Convention. As such, consideration of the Swiss Convention is outlined below. | Detailed Reasoning - Application of the Swiss Convention: In order for the Swiss Convention to apply, Article 1 of the Swiss Convention states: This Convention shall apply to persons who are residents of one or both of the Contracting States. The relevant entity for the purpose of applying the Swiss Convention must therefore be considered both a 'person' and a 'resident of a Contracting State' for the Swiss Convention to apply. Person Subparagraph 1c) of Article 3 of the Swiss Convention defines 'person' to include: ...an individual, a company, a trust and any other body of persons. Based on the rights and obligations under the FCP Fund Contract, a trust relationship exists between the Investor, the FCP, the Fund Management Company and Custodian. Therefore, there is a 'trust' within the meaning of Australian tax law and therefore a 'person' within the definition at subparagraph 1c) of Article 3 of the Swiss Convention. Resident of a Contracting State Paragraph 1 of Article 4 of the Swiss Convention provides the following: For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax as a resident of that State, and also includes the Government of that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State. In addition, sub-subparagraph 3a)(i) of the Protocol to the Swiss Convention states that, in relation to paragraph 1 of Article 4 of the Swiss Convention, it is understood that the term 'resident of a Contracting State' includes, in particular, a person that is a pension scheme established in that State. Accordingly, the FCP must be a 'person' and a 'pension scheme established in Switzerland' to satisfy the definition of a 'resident of a Contracting State' for the purposes of the Swiss Convention. As detailed above, it has been established that the FCP is a 'person' within the definition at subparagraph 1c) of Article 3 of the Swiss Convention. Subparagraph 1i) of Article 3 of the Swiss Convention provides the following in respect of the term 'pension scheme': ...the term "pension scheme" means any plan, scheme, fund, foundation, trust or other arrangement established in a Contracting State or, in the case of Australia, that is an Australian superannuation fund for the purposes of Australian tax, which is: (i) regulated by that State; and (ii) operated principally to administer or provide pension or retirement benefits or to earn income for the benefit of one or more such schemes. The FCP was established in Switzerland and is regulated by Swiss law. The FCP is operated principally to earn income for the benefit of the Investor (restricted to Swiss pension schemes) and is therefore a 'pension scheme' within the definition of the term 'pension scheme' of the Swiss Convention. Therefore, the FCP is a 'resident' of Switzerland. Conclusion As established above, the FCP is both a 'person' and a 'resident' of Switzerland in accordance with the definitions within the Swiss Convention. Therefore, the FCP meets the requirements of Article 1 of the Swiss Convention and is subject to its application. | Detailed Reasoning - Swiss Convention - application to taxes: Paragraphs 1 and 2 of Article 2 of the Swiss Convention, in respect to taxes covered, provides the following: 1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State and, in the case of Switzerland, on behalf of its political subdivisions or local authorities, irrespective of the manner in which they are levied. 2. There shall be regarded as taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation. In addition, subparagraph 3a) of Article 2 of the Swiss Convention provides the following: The existing taxes to which this Convention shall apply are in particular: a) in Australia: the income tax, the fringe benefits tax and resource rent taxes imposed under the federal law of Australia; (hereinafter referred to as "Australian tax"); Based upon the above, the Swiss Convention applies to all taxes imposed on income and in particular applies to Australian income tax. Section 128B of the ITAA 1936imposes liability to withholding tax on dividend, interest and royalty income derived by non-residents. As such, withholding tax payable in respect of dividends paid to non-residents is considered to be an Australian income tax and is covered by the Swiss Convention. | Detailed Reasoning - Dividend income: Article 10 of the Swiss Convention is the relevant provision in relation to dividend income. The provision states relevantly: a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which, in the case of Australia, holds directly at least 10 per cent of the voting power in the company paying the dividends, or in the case of Switzerland, holds directly at least 10 per cent of the capital in the company paying the dividends; b) 15 per cent of the gross amount of the dividends in all other cases. a) A Contracting State, or political subdivision or a local authority thereof (including a government investment fund); b) a central bank of a Contracting State; c) in the case of Australia, a resident of Australia deriving such dividends from the carrying on of complying superannuation activities; or d) in the case of Switzerland, a pension scheme whose investment income is exempt from Swiss tax. For subparagraph 4d) of Article 10 of the Swiss Convention to apply to the Fund, to provide an exemption from withholding tax on dividends, it must satisfy the following: • There are dividends that are paid by companies that are residents of Australia to a resident of Switzerland. • The beneficial owners of the dividends are pension schemes whose investment income is exempt from Swiss tax. • The beneficial owners of the dividends hold directly no more than 10 per cent of the voting power in the companies paying the dividends. | Detailed Reasoning - There are dividends paid by companies that are residents of Australia to residents of Switzerland: The Sub-Fund holds shares in ASX-listed Australian resident companies from which they derive dividend income. Therefore, there are dividends paid by Australian resident companies. In respect of the term 'paid...to', the OECD Commentaries provide important guidance on this term and will be instructive in identifying the context within which it is to be interpreted and applied. Paragraph 4 of the OECD Commentaries on Paragraph 1 of Article 10 explains the meaning of that paragraph and highlights that it does not prescribe the exclusive right to the taxation of dividends to 'the State of the beneficiary's residence or...in the State of which the company paying the dividends is a resident'. Paragraphs 5 to 7 of the OECD Commentaries on Paragraph 1 of Article 10 go on to state: 5. Taxation of dividends exclusively in the State of source is not acceptable as a general rule... 6. On the other hand, taxation of dividends exclusively in the State of the beneficiary's residence is not feasible as a general rule... 7. For this reason, paragraph 1 states simply that dividends may be taxed in the State of the beneficiary's residence. The term "paid" has a very wide meaning, since the concept of payment means the fulfillment of the obligation to put funds at the disposal of the shareholder in the manner required by contract or by custom. The Commentaries provide context around the introduction of the requirement of 'beneficial ownership' into paragraph 2 of Article 10 as follows: 12. The requirement of beneficial ownership was introduced in paragraph 2 of Article 10 to clarify the meaning of the words "paid...to a resident" as they are used in paragraph 1 of the Article. It makes plain that the State of source is not obliged to give up taxing rights over dividend income merely because that income was paid direct to a resident of a State with which the State of source had concluded a convention. Further, the OECD Commentaries at paragraphs 12.2 to 12.3 provides examples of situations where agents, nominees, and conduit companies acting as a fiduciary or administrator on account of the interested parties would not be the 'beneficial owner' of the income despite being the direct recipient of the income. In particular, paragraph [12.4] states: In these various examples (agent, nominee, conduit company acting as a fiduciary or administrator), the direct recipient of the dividend is not the "beneficial owner" because that recipient's right to use and enjoy the dividend is constrained by a contractual obligation to pass on the payment received to another person. The direct recipients of the dividends paid by Australian resident companies in respect of the Australian investments held by the FCP is the Asset Manager who is located in Switzerland. It is evident from the OECD Commentaries that the main focus of the term 'paid...to' in paragraph 1 of Article 10 of the Swiss Convention requires an enquiry into the status of the 'beneficial owner' of the dividend income and not the status of the intermediary who is the direct recipient of the payment. As detailed above, paragraph 4 of Article 10 of the Swiss Convention removes the taxing rights on dividend income sourced from Australia where it can be determined that the 'beneficial owner' of the dividends is a Swiss pension scheme whose investment income is exempt from Swiss tax. Therefore, the 'beneficial ownership' of the dividend income should be assessed in respect of the requirements of paragraph 4 of Article 10 of the Swiss Convention. | Detailed Reasoning - The beneficial owners of the dividends are pension schemes whose investment income is exempt from Swiss tax: Sub-paragraph 4(d) of Article 10 requires the beneficial owners of the dividend income to be a 'pension scheme whose investment income is exempt from Swiss tax'. The FCP Fund Contract limits investors to the extent that the ultimate beneficial owners of the income of FCP must be the Investor, which is a Swiss pension scheme under the DTA. The income of FCP includes the dividend income derived from the Australian investments. As such, the ultimate beneficial owner of the dividend income received in respect of the Australian investments held through the FCP and its Sub-Fund is a pension scheme whose investment income is exempt from Swiss tax. | Detailed Reasoning - The beneficial owners of the dividends hold directly no more than 10 per cent of the voting power in the companies paying the dividends: The FCP Fund Contract limits the investments of the Sub-Funds whereby the fund management company may not acquire participation rights that in total represent more than 10% of voting rights or that enable it to exert a significant influence on an issuer's management. The Sub-Fund holds less than 10% of the voting power in the Australian resident companies paying dividends. Based upon the above, this condition is satisfied. | Detailed Reasoning - Other provisions of Article 10 of the Swiss Convention: Paragraphs 7 and 9 of Article 10 of the Swiss Convention operate to limit the application of subparagraph 4d) of Article 10 of the Swiss Convention in certain circumstances. These paragraphs do not apply for the following reasons: • The ultimate beneficial owner of the income does not carry on a business through a permanent establishment situated in Australia and do not perform independent personal services from a fixed base in Australia. • The Australian resident companies that pay dividends from the investments held through the FCP and its Sub-Fund are not dual residents of both Australia and Switzerland, pursuant to paragraph 1 of Article 4 of the Swiss Convention. | Detailed Reasoning - Conclusion: The ultimate beneficial owner of the dividends paid by Australian resident companies from investments held through the FCP and its Sub-Fund is a Swiss pension scheme whose investment income is exempt from Swiss tax. Furthermore, the ultimate beneficial owners of the dividend income hold directly no more than 10 per cent of the voting power in the Australian resident companies paying dividends. Therefore, subparagraph 4d) of Article 10 of the Swiss Convention will apply to the dividends paid by Australian resident companies in respect to Australian investments held through the FCP and its Sub-Fund such that the dividends shall not be taxed in Australia.

Question 1: Does subparagraph 4d) of Article 10 of the Swiss Convention apply to the dividend income paid by Australian resident companies with respect to the Australian investments held by FCP and its Sub-Fund, such that the dividend income shall not be taxed in Australia?