Private ruling: Withholding tax - exemptions
Date of advice: 1 April 2026
Published: 15 June 2026
Ruling period: 1 July 20xx to 30 June 20xx
Date scheme commenced: 1 July 20xx

Ruling: Q1: Is the Fund excluded from liability to withholding tax on its interest, dividend and non-share dividend income derived in respect of its current investments (as limited by the relevant facts and circumstances of this Ruling), under paragraph 128B(3)(jb) of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: Yes.

Relevant facts and circumstances: Entity A 1. Entity A is in Foreign Jurisdiction C. Entity A is responsible for administering the Fund under Foreign Jurisdiction Legislation. 2. Entity A is required to undertake the duties as prescribed by the Foreign Jurisdiction Legislation. The Combined Pension Scheme 3. The Combined Pension Scheme is a defined benefit pension scheme primarily for employees in a specific industry. 4. Dozens of funds administer the Combined Pension Scheme with each fund being run by an entity that has some discretion over how to administer the Combined Pension Scheme. The Fund is an administering entity of the Combined Pension Scheme. 5. The Combined Pension Scheme is a funded scheme, meaning that the contributions received are invested to provide each fund with assets which are used to pay retirement and death benefits to the employees. These assets are held and invested at the fund level and each individual employer is given a notional asset allocation. 6. The scheme covers eligible employees of various eligible employers. The employees of these eligible employers automatically join the Combined Pension Scheme. 7. The new scheme allows more flexibility around paying into the scheme and drawing benefits in comparison to the previous scheme. Normal pension age is linked to the state pension age but benefits can be drawn earlier or later, between age xx and xx. 8. Under the new scheme the pensionable pay for each year of membership is used to calculate a pension amount for that particular year, which is then revalued each year in line with inflation The Fund 9. The Fund was created by Foreign Jurisdiction Legislation. 10. Both the members and employers must reside in Entity A's local area (ie within Foreign Jurisdiction C). 11. The Fund is a Foreign Jurisdiction C resident in accordance with the Relevant Tax Treaty. 12. Pension schemes can only be created by certain entities listed in the Foreign Jurisdiction Legislation. All of the entities that can create funds are located in Foreign Jurisdiction C. 13. Historically the Combined Pension Scheme was intended for Entity A employees only. However, this has been relaxed over the years and many more types and numbers of employers can now participate in the Fund. 14. There is only one plan under the Fund, the Combined Pension Scheme. 15. The Fund was established, and is maintained, to provide benefits for individuals who are not Australian residents. 16. Access to benefits - Members must retire from work and be eligible to receive a pension. 17. Payment - The fund pays pensioners on a monthly basis from the assets of the Fund. 18. Restrictions to benefits - Members are unable to access benefits before a certain age unless through ill-health, doing so incurs additional tax on their pension. 19. The Fund is not a resident of Australia for tax purposes. 20. The Fund is generally exempt from taxation in Foreign Jurisdiction C in accordance with Foreign Jurisdiction Legislation. 21. No contributions to the Fund are capable of being claimed as a tax offset or as a deduction under either the Income Tax Assessment Act 1997 (ITAA 1997) or the ITAA 1936. 22. Income of the Fund is not 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. The Fund's current Australian investments 23. Currently the Fund has a custodian and investment manager through which it holds its Australian investments. 24. On the facts provided, it is accepted that the Fund is the beneficial owner of Australian equity investments upon which it derives interest, dividend and non-share dividend income. 25. The Fund's equity 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 appoint a director to the Board of Directors of the Australian company or equivalent role in a trust. • 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. 26. This ruling does not cover any investments held by third party pooled funds where the Fund receives a return on units it owns in a pooled fund or any distributions from another fund that are not interest or dividends from Australia that are beneficially owned by the Fund.

Relevant legislative provisions: Income Tax Assessment Act 1936 paragraph 128B(3)(jb) | Income Tax Assessment Act 1936 subsection 128B(3CA) | Income Tax Assessment Act 1936 paragraph 128B(3CC) | Income Tax Assessment Act 1936 subsection 128B(3CD) | Income Tax Assessment Act 1936 section 128D | Income Tax Assessment Act 1997 section 118-520 | Income Tax Assessment Act 1997 Subdivision 880-C Summary | The Fund is considered a superannuation fund for foreign residents and is excluded from withholding tax in relation to interest, dividend and non-share dividend income derived from its investments under paragraph 128B(3)(jb) or the ITAA 1936.

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. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - 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. | Detailed Reasoning - 1. 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 employers, eligible employees as well as income earned from the investment of the Fund's monies. As such, the Fund meets the requirements of being a 'fund'. The Fund has provided a statement that it is an indefinitely continuing fund. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - 2. 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). 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 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. 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 - 3. Established in a foreign country: The Fund was established in Foreign Jurisdiction C. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - 4. Was established and maintained only to provide benefits for individuals who are not Australian residents: The Fund was established to assure the payment and guarantee of benefits to certain employees and their beneficiaries. The employers and their employees reside in Foreign Jurisdiction C. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - 5. 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 office of the Fund is in Foreign Jurisdiction C. The Fund was established under Foreign Jurisdiction C law and is administered and managed from Foreign Jurisdiction C. None of the individuals or bodies responsible for the management of the Fund is an Australian resident. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - 6. Subsection 118-520(2): 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. Therefore, the Fund satisfies these requirements. Conclusion on section 118-520 of the ITAA 1997 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 for the purposes of subparagraph 128B(jb)(i) of the ITAA 1936. | Detailed Reasoning - Subparagraph 128B(3)(jb)(ii) of the ITAA 1936: 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. The Fund has provided a list of its Australian Investments that it holds through the custodian and investment manager. This list identifies the fund's Australian investments are in Australian listed securities. Therefore, the Fund will satisfy this requirement. | Detailed Reasoning - The Fund is exempt from income tax in the country in which the non-resident resides: The Fund has submitted a notice from the Foreign Jurisdiction C Tax Authority which states that the Fund is registered and that tax relief and exemptions are available. 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: • Currently the Fund is the legal and beneficial owner of the investments held through an Investment Manager. • The Fund has a Custodian and an Equity manager acting as Investment Manager. • The Custodian Agreement, and Memorandum of Understanding with the Investment Manager are provided. • The Australian investment returns flow from Equity manager to the Fund. The Fund has confirmed that dividends are distributed and then reinvested immediately (as supported by the Equity manager report provided). On the facts provided, it is accepted the Fund is the beneficial owner of its Australian investments (as described in and limited by the relevant facts and circumstances of this Ruling). 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. The ruling does not cover any investments held by third party pooled funds where the Fund receives a return on units it owns in a pooled fund or any distributions from another fund that are not interest or dividends from Australia that are beneficially owned by the Fund. | 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: • The Fund must satisfy the 'portfolio interest test' in relation to the test entity (subsection 128B(3CC) of the ITAA 1936) • The Fund 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 Fund because of: i. Subdivision 880-C of the ITAA 1997, or ii. Division 880 of the Income Tax (Transitional Provisions) Act 1997. | Detailed Reasoning - 1. 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 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. Based on evidence provided, 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 investments. | Detailed Reasoning - 2. 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 current investments discussed of the relevant facts and circumstances to this Ruling: a) 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. b) 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. c) 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. d) 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. e) 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 - 3. 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 interest, dividend and non-share dividend income derived from its investments under paragraph 128B(3)(jb) of the ITAA 1936.