Private ruling: Foreign superannuation funds
Date of advice: 30 July 2024
Published: 9 September 2024
Ruling period: 1 July 20XX - 30 June 20XX
Date scheme commenced: 1 July 20XX

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

Relevant facts and circumstances: The Fund 1. The Fund is an indefinitely continuing fund that was established to proficiently administer the retirement fund in order to provide its members and their beneficiaries with income at retirement or upon disability or death. 2. The Fund is a defined benefit plan. This means that retirement benefits are determined using a set formula rather than being directly related to contributions to the Fund. 3. The Fund is governed by legislation of a foreign country. 4. The Fund is administered by a Board of Trustees who are appointed or elected, including active members of the Fund. 5. The Board of Trustees have full power to invest and reinvest the Fund's assets subject to the terms, conditions, limitations and restrictions imposed by law. Management of the Fund is the responsibility of the executive director, appointed by the board. The executive director is responsible for the proper operation of the Fund, engaging professional services and paying expenses necessary for operations. 6. The Fund is a resident of a foreign country for the purposes of taxation and is exempt from taxation in that country. Membership of the Fund 7. All personnel employed in a permanent status position, not less than half-time, by included employers, are required to be members as a condition of their employment. Contributions 8. Contributions to the Fund are made by members, employers and the non-employer contributing entity. The payment of benefits is also partly funded by investment income received by the Fund. 9. All members contribute a percentage of earnable compensation to the Fund by payroll deduction on a pre-tax basis. 10. Employers also contribute a percentage of earnable compensation to the Fund. Refunds 11. A member may be eligible for a lump-sum refund of contributions and interest if that member terminates their employment. However, a refund may not be available if the member is moving to another employer covered by the Fund. The taxable portion of a member's refund is subject to applicable taxes of the foreign country. 12. Refunds paid by the Fund in the financial year ended 30 June 20XX to eligible members, were insignificant relative to the other benefits paid by the Fund over the same period. 13. Partial withdrawals and loans are not allowed under the Fund. Creditable Service 14. Members receive service credit from their employment. The conditions under which a member receives service credit depend on the nature of their employment contract, accumulating a maximum of one year of service credit for each fiscal year of employment. 15. The maximum amount of creditable service that can be obtained by a member is 40 years. Survivor's Benefits 16. If a member holding an active account with the Fund dies prior to retirement, their beneficiaries will receive payments and/or benefits from the Fund. 17. If the member dies with less than 10 years of creditable service, that member's beneficiaries will receive a lump-sum refund of the member's contributions and interest. 18. If the member dies with more than 10 years of creditable service, that member's beneficiaries will be able to choose between a monthly benefit for life and a lump-sum refund of the member's contributions and interest. Disability Retirement Benefits 19. A member is eligible to apply for monthly disability retirement benefits if they are an active member, have at least 10 years of creditable service and are permanently disabled. 20. Disability retirement benefits are calculated in the same way as service retirement benefits however there is no age requirement for disability retirement. Service Retirement Benefits 21. Members are eligible for monthly service retirement benefits when they meet the benefit criteria. 22. There are legislative limits on a member's final average salary. 23. Members may elect to receive a reduced retirement benefit for a number of reasons, including to allow for a survivors benefit for beneficiaries after the member's death. Survivors Benefit 24. A members monthly retirement benefits are reduced actuarially to allow for payments or benefits to the members beneficiaries. 25. The amount of the reduction in monthly retirement benefits depends on the member's age, the age of their beneficiaries and federal tax regulations. 26. Survivors benefits can be provided either as a lump sum following the members death or a lifetime monthly benefit. Australian Investments 27. The Fund legally and beneficially owns a number of Australian investments which it holds directly. 28. The Fund's Australian investments have the following characteristics: a. The Fund holds less than 10% of the total participating interests in each entity and has never held more than a 10% participation interest. b. The Fund will hold less than 10% of the total participation interests in each entity in the circumstances detailed in paragraph 128B(3CC)(b) of the ITAA 1936, c. Neither the Fund, nor any related part of the Fund, has involvement in the day-to-day management of the business of any of the Australian investments, d. Neither the Fund, nor any related part of the Fund, holds any right to appoint a person to a board, committee or similar, either directly or indirectly, of any of the Australian investments, e. Neither the Fund, nor any related party of the Fund, holds the right to representation on any investor representative or advisory committee (or similar) of any of the Australian investments, f. Neither the Fund, nor any related part of the Fund, has the ability to direct or influence the operation of any of the Australian investments outside of the ordinary rights conferred by the equity interest held, g. The Fund has not entered into or received any side letters, arrangements or agreements, and h. The Fund does not hold any veto rights on security holder votes.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 6 | Income Tax Assessment Act 1936 Division 6 | Income Tax Assessment Act 1936 Section 128B | Income Tax Assessment Act 1936 subsection 128B(1) | Income Tax Assessment Act 1936 subsection 128B(2) | Income Tax Assessment Act 1936 subsection 128B(3) | Income Tax Assessment Act 1936 paragraph 128B(3)(jb) | Income Tax Assessment Act 1936 subsection 128B(3CA) | Income Tax Assessment Act 1936 subsection 128B(3CB) | Income Tax Assessment Act 1936 subsection 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 subsection 118-520(1) | Income Tax Assessment Act 1997 subsection 118-520(2) | Income Tax Assessment Act 1997 Subdivision 880-C | Income Tax Assessment Act 1997 Subdivision 960-GP | Income Tax Assessment Act 1997 Section 995-1 | Income Tax (Transitional Provisions) Act 1997 Division 880

Reasons for decision: Summary: The Fund is excluded from liability to withholding tax on interest, dividend and non-share dividend income derived from its investments in accordance with paragraph 128B(3)(jb) of the ITAA 1936. | Detailed Reasoning - Detailed reasoning: Section 128B of the ITAA 1936 imposes liability to withholding tax on income derived by a non-resident that consists of dividend income (subsection 128B(4) of the ITAA 1936), interest income (subsection 128B(5) of the ITAA 1936) as well as other income prescribed in that section. Subsection 128B(3) of the ITAA 1936 notes that section 128B of the ITAA 1936 will not apply to prescribed categories of income. Relevantly, paragraph 128B(3)(jb) of the ITAA 1936 states: (jb) income that: (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; | Detailed Reasoning - Note:: See subsection (3CA) for extra requirements relating to this paragraph. As referred to in the note to paragraph 128B(3)(jb) above, subsection 128B(3CA) contains additional requirements that must be satisfied in relation to certain income that would otherwise meet the criteria in paragraph 128B(3)(jb). These extra requirements apply only to assets which were acquired after 27 March 2018 and to all assets after 30 June 2026 no matter when they were acquired. Relevantly: i. The fund must satisfy the 'portfolio interest test' in relation to the test entity (subsection 128B(3CC) ii. The fund must satisfy the 'influence test' (subsection 128B(3CD) in relation to the test entity, and iii. The income cannot otherwise be non-assessable non-exempt income of the Fund because of: a. Subdivision 880-C of the ITAA 1997, or b. Division 880 of the Income Tax (Transitional Provisions) Act 1997 . Therefore, an entity will not be liable to withholding tax on income pursuant to paragraph 128B(3)(jb) if: These requirements of paragraph 128B(3)(jb) of the ITAA 1936 are considered below. Sub paragraph 128B(3)(jb)(i) of the ITAA 1936 | Detailed Reasoning - The Fund is a non-resident: The Fund was established outside of Australia, and is centrally managed and controlled by entities none of which are Australian residents. The Fund is not a resident of Australia for tax purposes. Therefore, the Fund satisfies this requirement. | Detailed Reasoning - The Fund is a superannuation fund for foreign residents: Superannuation fund for foreign residents is a defined term in the ITAA 1936. Subsection 6(1) of the ITAA 1936 states: superannuation fund for foreign residents has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. Subsection 995-1(1) of the ITAA 1997 sets out the following: superannuation fund for foreign residents has the meaning given by section 118- 520. The term 'superannuation fund for foreign residents' is defined in section 118-520 of the Income Tax Assessment Act 1997 (ITAA 1997) as follows: | Detailed Reasoning - 118-520 Meaning of superannuation fund for foreign residents: (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 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. Consequently, for the Fund to be considered a superannuation fund for foreign residents for the purposes of paragraph 128B(3)(jb) of the ITAA 1936, it must be established that: | Detailed Reasoning - The Fund is an indefinitely continuing fund: The term 'indefinitely continuing 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'. The legislation provides no guidance on the meaning of 'indefinitely continuing'. It is not a technical legal expression, and the ordinary meanings of indefinitely and continuing involve little ambiguity or controversy. The general view is that an indefinitely continuing fund does not have to continue forever, but rather that the governing rules should not fix an express termination date. There is no indication that there is any contemplation of the Fund ending at a specific point in time. In addition, the Fund provided a statement representing that it is an indefinitely continuing fund. Therefore, it is accepted the Fund will continue to operate for an indefinite period of time. Therefore, this requirement is satisfied. | Detailed Reasoning - The Fund is a provident, benefit, superannuation or retirement fund: The phrase 'a provident, benefit, superannuation or retirement fund' under subparagraph 118-520(1)(a)(ii) is not defined in either the ITAA 1997 or the ITAA 1936. However, the phrase has been subject to judicial consideration. In Scott , the High Court examined the terms 'superannuation fund' and 'fund'. Justice Windeyer stated at ATD 351; AITR 312; ALJR 278 that: ... I have come to the conclusion that there is no essential single attribute of a superannuation fund established for the benefit of employees except that it must be a fund bona fide devoted as its sole purpose to providing for employees who are participants money benefits (or benefits having a monetary value) upon their reaching a prescribed age. In this connexion "fund", I take it, ordinarily means money (or investments) set aside and invested, the surplus income there from being capitalised. I do not put this forward as a definition, but rather as a general description. In a later case, Mahoney v. Commissioner of Taxation (Cth) (1967) 41 ALJR 232; (1967); 14 ATD 519; 10 AITR 463 (Mahoney case), the High Court took a similar view as in Scott, Justice Kitto expressed the view at ALJR 232; (1967); ATD 520; AITR 464 that: All that need be recognised is that just as 'provident' and 'superannuation' both referred to the provision of a particular kind of benefit - in the one case a provision against contemplated contingencies, and in the other case a provision, to arise on an employee's retirement or death or other cessation of employment, of a subvention for him or his estate or persons towards whom he may have stood in some kind of relation commonly giving rise to a legal or moral responsibility - so 'benefit' must have meant a benefit, not a general sense, but characterized by some specific future purpose. The court found that the expression takes its meaning from past usage and the meaning of the several expressions must be arrived at in light of their ordinary usage. As such, the term 'benefit' requires a purpose narrower than conferring benefits in a completely general sense. The benefit must be characterised by some future purpose. Likewise, a provident fund must not refer to the provision of funds in a general sense but must relate to a provision against contemplated contingencies. The cases mentioned above emphasise that the benefits must be provided for a specific purpose and require that there is a connection between the benefit received and the provision by the fund for retirement or death of a member or against 'contemplated contingencies', such as death, disability or serious illness. In this case, the Fund is a defined benefit pension plan. Member of the Fund may only directly receive benefits or payments from the fund prior to reaching the age of XX if the member: a) has at least XX years of creditable service; b) is permanently disabled (i.e. Disability Retirement Benefits); c) dies (i.e. Survivor's Benefits); or d) receives a refund of contributions and interest after their employment has been terminated. For these circumstances, the Fund has a purpose of providing a pool of assets for use by current and former eligible members only on their retirement, death or contemplated contingencies such as becoming permanently disabled. The Commissioner also accepts that the ability of members to receive a refund of contributions and interest is a minor and incidental feature of the Fund in the circumstances. The factors that point to this conclusion include that: • the refunds paid to members by the Fund in the financial year ended 30 June 20XX were insignificant relative to the other benefits paid by the Fund; and • refunds were subject to applicable taxes of the foreign country. As both the key objective of the Fund and the true operation of the Fund have the sole purpose of providing retirement benefits, the Fund is considered to be a provident, benefit, superannuation or retirement fund. Therefore, this requirement is satisfied. | Detailed Reasoning - The Fund was established in a foreign country: The Fund was established in a foreign country. Therefore, this requirement is satisfied. | Detailed Reasoning - The Fund was established and maintained only to provide benefits for individuals who are not Australian residents: The Fund was established in a foreign country for its participants and is maintained only to provide benefits to members who are employed in a relevant industry that foreign country. It is considered that the possibility of a very small number of members being returned residents or becoming Australian residents after ceasing membership in the Fund 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, this requirement is satisfied. | Detailed Reasoning - The central management and control of the Fund is carried on outside of Australia by entities none of whom are Australian residents: The central management and control of the Fund is in a foreign country and is carried out by individuals who are not Australian residents. In addition, the Fund provided a statement representing that its' central management and control is carried on outside Australia by entities none of whom is an Australian resident. Therefore, this condition is satisfied. No amount paid to the Fund or set aside for the Fund has been or can be deducted under the ITAA 1997 and no tax offset has been allowed or is allowable for such an amount 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. An amount paid to the Fund or set aside for the Fund has not been and cannot be deducted under the ITAA 1997. A tax offset has not been allowed nor would be allowable for any amount paid to the Fund or set aside for the Fund. Therefore, the Fund will satisfy this requirement. | 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 for the purposes of subparagraph 128B(3)(jb)(i) of the ITAA 1936. | 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, dividends or non-share dividends paid by Australian resident companies. The Fund invests directly into Australia and receives interest, dividend or non-share dividend income directly from its Australian investments. It will, therefore, derive the relevant income for the purposes of subsection 128B(3CA) of the ITAA 1936 and paragraph 128B(3)(jb) of the ITAA 1936. | Detailed Reasoning - The Fund is exempt from income tax in the country in which the non-resident resides: The Fund is exempt from taxation on the interest, dividend and non-share dividend paid by Australian companies in the country in which the Fund resides. Therefore, the Fund will satisfy this requirement. | 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 . Income derived by Fund would not be otherwise treated as not assessable and not exempt income by virtue of the above provisions. Accordingly, the above exclusion should not apply to exclude the Fund from entitlement to the withholding tax exemption for superannuation funds for foreign residents. | Detailed Reasoning - Conclusion: As all the requirements of paragraph 128B(3)(jb) of the ITAA 1936 are satisfied, the Fund will be entitled to an exemption from withholding tax on interest, dividend and non-share dividend income derived in respect of assets acquired on or before 27 March 2018 under paragraph 128B(3)(jb) of the ITAA 1936. It has been established above that the Fund has satisfied all of the pre-existing conditions of paragraph 128B(3)(jb) of the ITAA 1936. As such, the below analysis concentrates only on the extra requirements outlined above which apply to the Fund's assets acquired after 27 March 2018 and to all the Fund's assets after 30 June 2026 no matter when they were acquired. | Detailed Reasoning - Subsection 128B(3CA) of the ITAA 1936: Income from investments acquired after 27 March 2018 and income from all investments after 30 June 2026 no matter when they were acquired, must satisfy the requirements of subsection 128B(3CA) in order for that income to be exempt from withholding tax under paragraph 128B(3)(jb). Dividend income derived by the Fund from its' Australian Investments will fall into this category. Subsection 128B(3CA) states: (3CA) Paragraph (3)(jb) applies to income derived by the superannuation fund mentioned in subparagraph (3)(jb)(i) only if: (a) the superannuation fund satisfies the portfolio interest test in subsection (3CC) in relation to the entity mentioned in subsection (3CB) (the test entity ): (i) at the time the income was derived; and (ii) throughout any 12 month period that began no earlier than 24 months before that time and ended no later than that time; and (b) the superannuation fund does not, at the time the income was derived, have influence of a kind described in subsection (3CD) in relation to the test entity; and (c) the income is not non-assessable non-exempt income of the superannuation fund because of: (i) Subdivision 880-C of the Income Tax Assessment Act 1997 ; or (ii) Division 880 of the Income Tax (Transitional Provisions) Act 1997 . Relevantly, the requirements in paragraphs 128B(3CA)(a), 128B(3CA)(b) and 128B(3CA)(c) must all be satisfied in order for paragraph 128B(3)(jb) to apply. Paragraph 128B(3CA)(a) of the ITAA 1936 Paragraph 128B(3CA)(a) requires applying the 'portfolio interest test' in subsection 128B(3CC) in relation to the relevant 'test entity' mentioned in subsection 128B(3CB) at particular times. Subsection 128B(3CB) states: (3CB) For the purposes of subsection (3CA), the test entity is: (a) unless paragraph (b) applies-the entity that paid the interest, dividends or non-share dividends as mentioned in subparagraph (3)(jb)(ii); or (b) if subsection 128A(3) applies in relation to a resident trust estate (within the meaning of Division 6)-the trust estate. In the case of the Fund, the relevant 'test entities' are the Australian investments currently held by the Fund. | 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 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. Subsection 128B(3CB) defines the test entity to be either the entity that paid the interest, dividends or non-share dividends or, if subsection 128A(3) of the ITAA 1936 applies in relation to a resident trust estate, that trust estate. Subsection 995-1(1) of the ITAA 1997 defines total participation interest to have the meaning given by section 960-180 of the ITAA 1997, which states: An entity's total participation interest at a particular time in another entity is the sum of: (a) the entity's *direct participation interest in the other entity at that time; and (b) the entity's *indirect participation interest in the other entity at that time. A 'direct participation interest' that the Fund will have in a test entity is defined in the table in subsection 960-190(1) of ITAA 1997 and depends on what type of entity the other entity is. Item 1 of the table in subsection 960-190(1) and subsection 960-190(2) of the ITAA 1997 provide that a direct participation interest in a company is the 'direct control interest' (within the meaning of section 350 of the ITAA 1936 excluding the operation of subsections 350(6) and (7)) that the first entity holds in the other entity. Subsection 350(1) of the ITAA 1936 provides that an entity holds a direct control interest in a company at a particular time equal to the percentage of: (a) total paid up share capital (b) voting rights, or (c) rights to distributions of capital or profits that it holds in the company. Where there are different percentages in each of the above, the direct control interest is the greater or greatest of those percentages. Subsection 350(2) of the ITAA 1936 provides that where an entity holds different percentages of total rights to vote for the purposes of (b) above, the highest of those percentages applies in establishing the direct control interest. Subsection 960-185(1) of the ITAA 1997 provides that an entity's indirect participation interest in a test entity is established by multiplying its direct participation interest in an intermediate entity by the sum of the intermediate entity's direct and indirect participation interests in the test entity. The Fund does not hold more than 10% of the total participation of any of its Australian investments. In these circumstances, the Commissioner is satisfied that the total participation interest the Fund holds in the test entities: The Fund therefore satisfies the 'portfolio interest test' in respect of its Australian Investments. The Fund does not have influence of a kind described in subsection 128B(3CD) of the ITAA 1936 in relation to the test entity at the time the income was derived Paragraph 128B(3CA)(b) requires that the Fund does not have influence of a kind described in subsection 128B(3CD) in relation to the relevant 'test entity' mentioned in subsection 128B(3CB) at the time the income was derived. 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. As per the facts, the Fund does not have the ability to appoint a person such as a director or a member of an advisory or investment committee, either on its own or by pooling its interests with other investors. The Fund does not have the ability to veto or otherwise exert influence over the direction of the investment companies. Relevantly, in respect of the Australian investments: Accordingly, the Fund does not have influence of a kind described in subsection 128B(3CD) of the ITAA 1936 in respect of its Australian investments. the Fund does not have capacity to influence (either directly or indirectly) the day-to-day management of the operations of their investments. Consequently, the Commissioner accepts that the Fund does not have influence of a kind described in subsection 128B(3CD) of the ITAA 1936. The income received by the Fund is not non-assessable and non-exempt income of the Fund because of Subdivision 880-C of the ITAA 1997 or Division 880 of the Income Tax (Transitional Provisions) Act 1997 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 . Consequently, the Fund satisfies this condition in respect of its current Australian investments. | Detailed Reasoning - Conclusion on subsection 128B(3CA) of the ITAA 1936: All the requirements of subsection 128B(3CA) are satisfied in respect of any income that will be derived by the Fund. | Detailed Reasoning - Conclusion: As the Fund has met both the pre-existing and extra requirements under paragraph 128B(3)(jb) of the ITAA 1936 in relation to assets it acquired after 27 March 2018 and in relation to all assets after 30 June 2026, it will be excluded from withholding tax in relation to interest, dividend and non-share dividend income received in respect of those assets.

Does IVA apply to this private ruling?: Part IVA of the Income Tax Assessment Act 1936 contains anti-avoidance rules that can apply in certain circumstances where you or another taxpayer obtains a tax benefit, imputation benefit or diverted profits tax benefit in connection with an arrangement. | If Part IVA applies, the tax benefit or imputation benefit can be cancelled (for example, by disallowing a deduction that was otherwise allowable) or you or another taxpayer could be liable to the diverted profits tax. | We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part. | If you want us to rule on whether Part IVA applies, we will need to obtain and consider all the facts about the arrangement which are relevant to determining whether Part IVA may apply. | For more information on Part IVA, go to our website ato.gov.au and enter 'part iva general' in the search box on the top right of the page, then select 'Part IVA: the general anti-avoidance rule for income tax'. | the criteria in subparagraph 128B(3)(jb)(i), subparagraph 128B(3)(jb)(ii) and subparagraph 128B(3)(jb)(iii) are satisfied; and | the additional requirements in subsection 128B(3CA) either do not apply to the income or are satisfied in relation to that income. | No tax offsets have been allowed or would be allowable for an amount paid to the Fund or set aside for the Fund. | is less than 10% pursuant to paragraph 128B(3CC)(a) of the ITAA 1936 at all relevant times; and | would be less than 10% in the circumstances detailed in paragraph 128B(3CC)(b) of the ITAA 1936 at all relevant times. | Neither the Fund, nor any related party, is involved in the day to day management of the business of any of the Australian companies or trusts. | Neither the Fund, nor any related party, has the right to appoint a director to the Board of Directors of the Australian company, Australian debt issuer or equivalent role in a trust. | Neither the Fund, nor any related party, holds the right to representation on any investor representative or advisory committee (or similar) of the Australian companies or trusts. | Neither the Fund, nor any related party, has the ability to direct or influence the operation of the Australian companies or trusts 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 of the Australian companies or trusts.