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1 Are the amounts I receive from the XXXX (the "Fund") characterised as payments from a foreign pension fund or are they considered to be foreign trust distributions for the purposes of section 99 or 99B of the Income Tax Assessment Act 1936 (ITAA 1936)?

1 Yes. We consider your payments to be foreign trust distributions for the purposes of section 99B of the ITAA 1936, rather than a foreign pension. Question 2 As an Australian resident is the amount of $XX,XXX, being my accrued earnings within the Fund, declarable income and therefore fully taxable? Answer 2 Yes. Your accrued earnings are declarable income and therefore fully subject to taxation. Question 3 Does a varied or pro-rata evaluation or assessment apply to an Australian resident in regard to the total lump sum components that I received from the Fund? Answer 3 No. A varied or pro-rata assessment will not apply to the total lump sum components you received from the Fund. The scheme commenced on: 1 July 202X to 30 June 202Y

This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. Find out more about when you can rely on your private ruling at ato.gov.au/relyonprivateruling . While working for the XX XXX (Entity A) you became a member of their Fund on X XXXXXX 200X. You are an Australian resident for tax purposes and were for the entire time you were abroad. On X XXXXXX 202X, you received a lump sum payment of Country A $XXX,XXX from the Fund, and also commenced an annual pension to the amount of Country A $XX,XXX. The Fund has stated that your total personal contributions during the period of your membership were Country A $XXX,XXX. Employer contributions were stated as being twice this amount. You can access Fund retirement benefits from the age of 55 or prior to retirement (Article 31 of the Fund). Foreign tax does not apply to you as you were never a resident of XXXXXX.

Income Tax Assessment Act 1936 section 27H Income Tax Assessment Act 1936 section 27H(2) Income Tax Assessment Act 1936 section 99B(1) Income Tax Assessment Act 1936 section 99B(2) Income Tax Assessment Act 1936 section 99B(2)(a) Income Tax Assessment Act 1997 section 305-70 Income Tax Assessment Act 1997 section 6-5 Income Tax Assessment Act 1997 Division 770 Does IVA apply to this private ruling? No.

Question 1 Are the amounts I receive from the Fund characterised as payments from a foreign pension fund (the "Fund") or are they considered to be foreign trust distributions for the purposes of section 99 or 99B of the Income Tax Assessment Act 1936 (ITAA 1936)? Summary Yes. The amounts you receive from the Fund are considered to be foreign trust distributions and are therefore assessable under section 99B of the ITAA 1936. Detailed reasoning Benefits from the Fund are not treated as payments from a foreign superannuation fund but instead are considered to be foreign trust distributions. When an Australian resident receives a lump-sum payment from a foreign pension arranged as a trust, section 99B(1) of the ITAA 1936 treats the entire amount as trust property and requires full inclusion in assessable income, subject only to the specific carve-outs in subsection 99B(2). Section 99B of the ITAA 1936 deals with the receipt of trust amounts that have not previously been subject to tax in Australia.

For the purposes of context and consistency, the following 6 dot points have been taken from the private binding ruling issued to you by the ATO XXXX Business Line six months ago, Reference number XXXXXXXXX: •                 The Fund allows withdrawal of benefits when members reach retirement age, or upon their death, invalidity or the cessation of their employment. Those are purposes consistent with the Fund being a superannuation fund. •                 However, the Fund also allows a member to take a withdrawal settlement of their contributions prior to retirement. This can occur when they separate from their employment and are less than their normal retirement age. •                 The Fund satisfies some of the requirements of a foreign superannuation fund, however in general the Fund is not exclusively a provident, benefit or superannuation fund because it does not provide benefits for the specific future purposes of the individual's retirement.

•                 Members can withdraw benefits upon separation from the employer. In other words, the Fund provides for the payment of benefits for reasons other than retirement and not solely or exclusively for retirement purposes. •                 Accordingly, benefits from the Fund will not be a payment from a foreign superannuation fund and section 305-70 of the ITAA 1997 will not have any application (this section states that an Australian resident taxpayer who receives a lump sum from a foreign superannuation fund more than six months after becoming an Australian resident must include the 'applicable fund earnings' of the lump sum in their assessable income). In your situation The amounts you receive as payments from the Fund are considered to be foreign trust distributions and are therefore assessable under section 99B of the ITAA 1936. Question 2 As an Australian resident is the amount of $XX,XXX being my accrued earnings within the Fund, declarable income and therefore fully taxable? Summary Yes. Your accrued earnings are declarable income and therefore fully subject to taxation. Detailed reasoning

As an Australian resident, accrued earnings within the Fund are considered assessable income and must be declared in your income tax return. Your payments are considered to be funds from a foreign trust distribution rather than a foreign pension. Your accrued earnings, including amounts in the lump sum that represent earnings of the Fund, are not taken to represent corpus, as the earnings are attributable to income derived by the Fund which would have been subject to tax had the earnings been derived by a resident taxpayer. However, you may be eligible for deductions, which allows a portion of your pension to be tax-free if it represents a return of your personal contributions. Additionally, if foreign tax was withheld, you might be able to claim a foreign income tax offset to prevent double taxation. The High Court case of Macoun v Commissioner of Taxation [2015] HCA 44 confirmed that United Nations Joint Fund Pensions are taxable in Australia for retirees. The taxable components are accrued earnings, employer contributions and investment growth, with only the UPP portion being exempt from tax.

Subsection 99B(1) of the ITAA 1936 provides that where, at any time during a year of income, an amount, being property of a trust estate, is paidto, or applied for the benefit of, a beneficiary of the trust estate who was a resident at any time during the year of income , theassessable income of the beneficiary of the year of incomeshall, subject to subsection(2), include that amount. Subsection 99B(2) of the ITAA 1936 reduces the amount to be included in assessable income under subsection 99B(1) by so much of that amount, relevantly for present purposes, as represents the corpus of the trust, but not to the extent that it is attributable to income derived by the trust which would have been subject to tax had it been derived by a resident taxpayer. The term 'corpus' is not defined in the legislation; therefore, it takes the ordinary meaning of the term. The Macquarie Dictionary (Online edition 2019) defines 'corpus' to mean a 'principal or capital sum, as opposed to interest or income'. The amount that represents the corpus of the Fund includes any amounts previously deposited into the Fund by you and your employer. In your situation

Your earnings, including amounts in the lump sum that represent earnings of the Fund, are not taken to represent corpus, as the earnings are attributable to income derived by the Fund which would have been subject to tax had the earnings been derived by a resident taxpayer. Paragraph 99B(2)(a) of the ITAA 1936 applies to you so that: a)               the proportion of any lump sum that represents amounts previously deposited to the Fund by you and your employer is excluded from your assessable income, and b)               the proportion of any lump sum that represents earnings of the Fund (from the commencement date of the Fund) is included in your assessable income. Question 3 Does a varied or pro-rata evaluation or assessment apply to an Australian resident in regard to the total lump sum components that I received from the Fund? Summary No. For tax purposes, the ATO generally assesses lump sums based on whether they are personal contributions or are considered foreign pension income which is taxable in Australia.

Where a lump sum payment is attributable to multiple years, you may need to apportion the amount manually and include those amounts in your taxation return for the relevant year. Where your payments are foreign trust distributions rather than a foreign pension, a varied or pro-rata evaluation or assessment is not applicable. Detailed reasoning As the benefits from the Fund are not treated as a payment from a foreign superannuation fund, section 305-70 of the ITAA 1997 will not have any application. Section 305-70 states that an Australian resident taxpayer who receives a lump sum from a foreign superannuation fund more than six months after becoming an Australian resident must include the 'applicable fund earnings' of the lump sum in their assessable income. As Section 99B ITAA 1936 applies to your payments rather than section 305-70 ITAA 1997, application of a percentage amount across the total lump sum amount is not applicable. There is no separate, mechanical "pro-rata" rule built into section 99B for apportioning the payment.

Instead, carve-outs operate to reduce your assessable income by demonstrating that specific dollars will fall within one of the exceptions in section 99B(2). Documentation must be kept for substantiation purposes. Section 99B (2) minimises the amount determined under section 99B(1) to the extent that the distribution is sourced from the corpus of the trust unless this relates to gains or income made by the trust that hasn't been taxed in Australia but would have been taxed if it had been derived by a resident of Australia. When an Australian resident receives a lump-sum payment from a foreign pension arranged as a trust, section 99B(1) of the ITAA 1936 treats the entire amount as trust property and requires full inclusion in assessable income, subject only to the specific carve-outs in subsection 99B(2). Under Section 99B, foreign trust distributions are generally taxed in the year they are received, regardless of when the income was earned or accumulated. There is no mechanism to spread or "pro-rata" the amount across multiple years. The nature of the payment is such that trust distributions are treated as lump sum benefits.

Unless the distribution is clearly linked to income previously taxed or exempt (e.g. corpus or capital gains pre-1985), the ATO assumes it is assessable in full when received. Foreign trust distributions are treated as discrete, assessable events - not ongoing income streams. Consequently, pro-rata assessment does not apply the way it does for pensions or employment income. In your situation A varied or pro-rata assessment will not apply to the total lump sum components you received from the Fund. Instead, carve-outs operate to reduce your assessable income by demonstrating that specific dollars will fall within one of the exceptions in section 99B(2). Documentation must be kept for substantiation purposes. The Foreign Income Return Form Guide issued by the ATO provides essential information for Australian residents reporting foreign income and has a NAT number of 3425.