An Australian Superannuation Fund is a trust that has been registered and approved by the Australian Government, is funded by compulsory and voluntary contributions from employers and individuals over their working lives, and provides retirement income to them. All investment earnings within the Super Fund are taxed at 15%, except for capital gains, which are given a 33% discount. The individual taxpayer has made no contributions to the Super Fund since moving to Canada. The Super Fund was assumed by CRA to be an employee benefit plan and a superannuation or pension plan or fund, and to not deemed to be resident in Canada by s. 94(3). Is the fund considered “specified foreign property,” or is it an “exempt trust”? CRA responded:
The relevant exclusions are:
…Paragraph (m) – if the interest in the non-resident trust was not acquired for consideration by the taxpayer, or certain other persons. The employee’s interest in the Super Fund does not meet this exception because the employee’s contributions to the Super Fund constitute “consideration” for the acquisition of the interest in the trust.
Paragraph (n) – if the trust is described in paragraph (a) or (b) of the definition of “exempt trust” in subsection 233.2(1)… .
Paragraph (a)… includes only certain U.S. individual retirement accounts (IRAs)… .
Paragraph (b) of the definition of “exempt trust” refers to, inter alia, trusts that are exempt from the payment of income tax in the country in which they are resident.
Since Super Funds are subject to income tax in Australia, they do not meet this exception.
…[T]he taxpayer must report the “cost amount” of the interest in the Super Fund on the T1135 if the total of all cost amounts of all specified foreign property exceeds $100,000. …