Private ruling: Withholding tax - exemptions
Date of advice: 15 April 2026
Published: 29 June 2026
Ruling period: Dd MM YYYY to DD MM YYYY
Date scheme commenced: DD MM YYYY

Ruling: Q1: Is the Fund excluded from liability to withholding tax on interest and dividend income derived from its Australian investments (as described in the relevant facts and circumstances of this Ruling) in accordance with paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: Yes.

Relevant facts and circumstances: 1. The Fund has its registered office in a country that is not Australia. 2. The Fund is governed by the country's relevant pension legislation. 3. The Fund operates to provide pension benefits to employees of certain employers (members). 4. The Fund's central management and control is not in Australia. All investment decisions relating to the Fund assets are made outside Australia. 5. The benefits the member has accrued under the Fund shall be retained until such time as the member retires, dies or terminates employment with the employer. 6. The pension entitlements of the Fund are detailed in the relevant pension legislature. 7. The Fund offers members different pension options and accounts for members in cases of survivorship, death or disability. 8. The Fund is managed by its respective administering authority. 9. The pension scheme has not set a date for the Fund to be terminated and its termination is not anticipated. 10. The Fund invests directly into Australia and owns several Australian assets which are held through a custodian. The Fund has provided a list of its assets. 11. The Fund's investments have the following characteristics: • The Fund holds less than 10% of the total equity interests on issue of each Australian company or trust. • Neither the Fund, nor any related party of the Fund has any involvement in the day-to-day management of the business of any of the Australian companies or trusts. • 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. • 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. • The Fund only holds rights to vote in proportion to its equity interest in each Australian company or trust. 12. The Fund will receive interest and dividend income from companies who are residents of Australia for tax purposes. 13. An amount paid to the Fund or set aside for the Fund has not been and cannot be deducted under the Income Tax Assessment Act 1997 (ITAA 1997). 14. A tax offset has not been allowed nor would be allowable for any amount paid to the Fund or set aside for the Fund. 15. The Fund is not a resident of Australia for tax purposes. 16. The Fund is exempt from taxation in accordance with statute in its country of residence.

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: Summary: 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. | Detailed Reasoning - The Fund is a non-resident: The Commissioner has determined from the facts and circumstances that the Fund is not a resident of Australia. | Detailed Reasoning - The Fund is a superannuation fund for foreign residents: The term 'superannuation fund for foreign residents' is defined in section 118-520 of the ITAA 1997 which provides: 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. | Detailed Reasoning - An indefinitely continuing fund: The term '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'. In this case, the Fund is financed by the contributions made by the employer as well as income earned from the investment of the Fund's monies. As such, the Fund meets the requirements of being a 'fund'. There is no indication that there is an intention for the Fund to end at a definite point in time. Therefore, it is accepted that the Fund will continue to operate for an indefinite period. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - 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) refers to these authorities to provide 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). In this case, the primary objective of the Fund is to provide for the Fund members' pension on their retirement or for their families on death before or after retirement. The Fund provides benefits to members via a defined benefit scheme. Furthermore, the Fund does not provide benefits as a result of events other than old age retirement, disability or death. The Commissioner accepts these benefits align with the sole purpose of providing retirement benefits or benefits in other allowable contemplated contingencies. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - Established in a foreign country: The Fund was established in a country that is not Australia. Therefore, it satisfies this requirement. | Detailed Reasoning - Established and maintained only to provide benefits for individuals who are not Australian residents: The Fund was established in a foreign country for the purpose of providing retirement allowances and other benefits to the Fund's members in accordance with the local Legislature. The Fund's members include any employee. It is accepted that members reside in the foreign country and are not generally 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 will satisfy this requirement. | Detailed Reasoning - 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 Fund was established by the local government under the relevant country's laws. The Board administers and exercises the CM&C of the Fund. The Board has set up internal management entities to make decisions and take responsibility for management of the Fund. All of the above entities are based in the country and none of them are Australian residents. Those entities do not meet in Australia. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - Subsection 118-520(2): 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 The Fund has not and cannot deduct amounts under either the 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. Consequently, based on the statement provided by the applicant, this requirement is satisfied. | Detailed Reasoning - 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. | Detailed Reasoning - The Fund is exempt from income tax in the country in which the non-resident resides: The Fund is exempt from income tax on its interest and dividend income in its country of residence. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - 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, dividend or non-share dividend income paid by Australian resident companies. The Fund has confirmed the following: • The Fund has a custodian. • The Australian assets are directly held in the name of the Fund by the custodian. The investment managers have access to the custody accounts in order to make transactions. • The Australian assets are not comingled with other funds' assets. It is accepted on the facts presented that the Fund is the legal and beneficial owner of its Australian investments. The Fund will, therefore, derive the relevant income for the purposes of subsection 128(3CA) of the ITAA 1936 and paragraph 128B(3)(jb) of the ITAA 1936. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - 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: i. The Fund must satisfy the 'portfolio interest test' in relation to the test entity (subsection 128B(3CC) of the ITAA 1936) ii. The Fund must satisfy the 'influence test' (subsection 128B(3CD) of the ITAA 1936) in relation to the test entity, and iii. The income cannot otherwise be 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 . | Detailed Reasoning - 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 ITAA 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 or trust it currently invests in. Further, it would hold less 10% of the total participation interests in each Australian company or trust in the circumstances detailed in paragraph 128B(3CC)(b) of the ITAA 1936. The Fund therefore satisfies the 'portfolio interest test' in respect of its current investments. | Detailed Reasoning - The Fund 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 (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 Australian investments: Neither the Fund, nor any related party, has involvement in the day to day management of the business of any of the Australian companies or trusts. a. Neither the Fund, nor any related party, has the right to appoint a director to the Board of Directors of the Australian company or equivalent role in a trust. b. Neither 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. c. Neither the Fund, nor any related party, has the ability to direct or influence the operation of the Australian company, or trust outside of the ordinary rights conferred by the equity interest held. d. The Fund only holds rights to vote in proportion to its equity interest in each Australian company or trust. Based upon the above, the Commissioner accepts that the Fund does not have influence of a kind described in subsection 128B(3CD) of the ITAA 1936. | Detailed Reasoning - 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 . | Detailed Reasoning - Conclusion: The Fund is excluded from withholding tax in relation to dividend and interest income derived from its current Australian investments.