Private ruling: Exemption from Income tax/Withholding tax
Published: July 2011
Ruling period: Financial year ended 30 June 2005 | Financial year ended 30 June 2006
Date scheme commenced: 1 July 2004

Ruling: Q1: Is the trustee of the overseas based superannuation fund exempt from income tax on its dividend and/or interest income derived from Australia under paragraph 23(jb) of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1:  | Q2: Is the trustee of the overseas based superannuation fund excluded from liability to withholding tax on its interest and/or dividend income derived from Australia under paragraph 128B(3)(a) of ITAA 1936? | A2: 

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 foreign superannuation fund. The application includes the following documentation: · A statement from the trustee of the fund confirming that: the entity was established in a country outside Australia, the entity was established and is maintained and applied for the sole purpose of providing superannuation benefits for persons other than persons who are, or would ordinarily be or become, residents of Australia or residents of a Territory of the Commonwealth. the central management and control of the entity is carried on outside Australia by persons none of whom is a resident of Australia or a resident of a Territory of the Commonwealth, the entity is not one for which an amount has been set aside, or to which an amount has been paid, by a taxpayer that is an amount that has been allowed or is allowable as a deduction or in respect of which a rebate of tax has been allowed or is allowable under any provision of the Income Tax Assessment Act 1936 or Income Tax Assessment Act 1997. · Letter from the tax authorities in the country of residence of the fund confirming that the fund is exempt from taxation in that country and is a resident of that country for taxation purposes. · Copies of annual statements for the 2004 and 2005 years. · A copy of the fund document providing details of rules and benefits available to the members.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1). | Income Tax Assessment Act 1936 Paragraph 23(jb). | Income Tax Assessment Act 1936 Paragraph 128B(3)(a).

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. The term 'foreign superannuation fund' is defined in subsection 6(1) of the ITAA 1936 as follows: foreign superannuation fund means, subject to subsection 6(7A), a provident, benefit, superannuation or retirement fund: d) that was established in a country outside Australia; e) that was established, and is maintained an applied, for the sole purpose of providing superannuation benefits for persons other than persons who are, or would ordinarily be or become, residents of Australia or residents of a Territory; and f) the central management and control of which is carried on outside Australia by persons none of whom is a resident of Australia or a resident of a Territory; not being a fund for which an amount has been set aside, or to which an amount has been paid, by a taxpayer that is an amount that has been allowed or is allowable as a deduction, or in respect of which a rebate of tax has been allowed or is allowable, under any provision of this Act. Perusal of the rules indicates that the fund satisfies the definition of a foreign superannuation fund for the purposes of subsection 6(1) of the ITAA 1936. Under paragraph 23(jb) of the ITAA 1936, interest or dividends or non share dividends received by a foreign superannuation fund are exempt from Australian income tax if at all times during the year of income, the entity was a foreign superannuation fund. As it is considered that this pension fund was a foreign superannuation fund at all times during the year of income, interest and/or dividends or non-share dividends received by the foreign superannuation fund will be exempt from Australian income tax under paragraph 23(jb) of the ITAA 1936. Paragraph 128B(3)(a) of the ITAA 1936 exempts interest, dividend income or non-share dividends received by a foreign superannuation fund from Australian withholding tax if the income is exempt from income tax by virtue of paragraph 23(jb) of the ITAA 1936 and exempt from income tax in the country where the foreign superannuation fund resides. The certification from the tax authorities in the country of residence of the fund confirms that the fund is exempt from income tax on its interest and dividend income in that country. Accordingly, the interest and/or dividend income of the fund is excluded from withholding tax pursuant to paragraph 128B(3)(a) of the ITAA 1936.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.