Private ruling: Exemption from Income tax/Withholding tax
Published: November 2011
Ruling period: Financial year ended 30 June 2011 | Financial year ending 30 June 2012 | Financial year ending 30 June 2013 | Financial year ending 30 June 2014 | Financial year ending 30 June 2015
Date scheme commenced: 1 July 2010

Ruling: Q1: Is the trustee of the overseas based superannuation master trust excluded from liability to withholding tax on its interest and/or dividend income derived from Australia under paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: Yes. | Q2: Is interest and/or dividend income derived by the trustee of the overseas based superannuation master trust non-assessable income of the fund under section 128D of the ITAA 1936? | A2: Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The applicant has applied for a private ruling for the superannuation fund for foreign residents. The application includes the following documentation: o Relating to the Master Trust: A copy of a statement from the trustee of the overseas based superannuation master trust (the fund), confirming that the participating funds are indefinitely continuing funds and are provident, benefit, superannuation or retirement funds, were established in a foreign country, were established and are maintained only to provide benefits for individuals who are not Australian residents, the central management and control of the funds are carried on outside Australia by entities none of whom is an Australian resident, an amount paid to the participating funds or set aside for the participating funds has not been or cannot be deducted under the ITAA 1997 and a tax offset has not been allowed or is not allowable for such an amount. o Letter from the tax authorities in the country of residence of the fund certifying that the fund is a registered pension fund and is exempt from income tax in respect of its income from investments and deposits. o Copies of financial statements for the 2009 and 2010 years. o A copy of the trust deed which provides details of rules and benefits available to the members. o A list of participating plans in the master trust. o Relating to the participating funds: Copies of statements from the trustees of the participating funds, confirming that the participating funds are indefinitely continuing funds and are provident, benefit, superannuation or retirement funds, were established in a foreign country, were established and are maintained only to provide benefits for individuals who are not Australian residents, the central management and control of the funds are carried on outside Australia by entities none of whom is an Australian resident, an amount paid to the funds or set aside for the funds have not been or cannot be deducted under the ITAA 1997 and a tax offset has not been allowed or is not allowable for such an amount. o Letters from the tax authority in the country of residence of the participating funds certifying that each of the participating fund is a registered pension fund and is exempt from income tax in respect of its income from investments and deposits.

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: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. Paragraph 128B(3)(jb) of the ITAA 1936 excludes interest and dividend income from withholding tax where that income: (i) is derived by a non-resident that is a superannuation fund for foreign residents; and (ii) consists of interest, or consists of dividends or non-share dividends paid by a company that is a resident; and (iii) is exempt from income tax in the country in which the non-resident resides; For the financial years ended 30 June 2008 and onwards, 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(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 fund 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. 118-520(2) However, a fund is not a superannuation fund for foreign residents if: (a) an amount paid to the fund or set aside for the fund has been or can be deducted under this Act; or (b) a tax offset has been allowed or is allowable for such an amount. The trust deed and fund rules indicate that the master trust together with the participating funds have been established to provide pension and superannuation benefits for the members. On the basis of the information provided, it is considered that the fund is a superannuation fund for foreign residents as defined in section 118-520 of the ITAA 1997. The statement from the trustee of the fund also confirms that the requirements of the definition have been met. The tax authority in the country of residence of the master trust and the participating funds has confirmed that they are registered pension funds and are exempt from income tax in respect of income from investments and deposits. Accordingly the interest and/or dividend income of the fund is excluded from withholding tax pursuant to paragraph 128B(3)(jb) of the ITAA 1936. Section 128D of the ITAA 1936 provides that interest and dividend income that is excluded from withholding tax pursuant to paragraph 128B(3)(jb) is not assessable income.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.