Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Act 2019 (34 of 2019)

Schedule 3   Superannuation funds for foreign residents withholding tax exemption

Part 1   Amendments

Income Tax Assessment Act 1936

2   After subsection 128B(3C)

Insert:

(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.

(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.

(3CC) 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.

(3CD) 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).

(3CE) However, a superannuation fund does not have influence of a kind described in subsection (3CD) if, disregarding any breach of terms of a debt interest by any entity, the superannuation fund would not have influence of that kind.