Introduction to Legal Entity Fund Structure

This module covers the structure and hierarchy of legal entity platforms of Australia such as super, investor directed portfolio service, separately managed accounts etc., which are at the portfolio level. The Legal Entity application is enhanced to capture the TFN Status and the TFN Status Effective Date. The TFN Status Effective Date is also added at the portfolio level which will be used along with TFN Status to determine the applicability of withholding taxes for residents.

This functionality allows the maintenance of legal entity structure of funds in Australia, which includes superannuation funds, separately managed accounts etc.

There could be certain hierarchies where a SMA could have a parent legal entity, which could be an IDPS or a Super. The Super platform could have various sub types such as Accumulator, TTR (Transfer to Retirement) or Pension.

The tax residence of the portfolio will be updated based on certain factors such as the fund residence in case of IDPS or IMA. In case of SMA, any changes to the parent portfolio’s tax residence should also trigger a change to the tax residence of all linked child portfolios. Changes to the tax residence of the legal entity (fund residence) will trigger changes to the residence of all the linked super or smsf portfolios.

The GST in Australia has a Reduced Input Tax Credit (RITC) component and the RITC percentages could vary based on the fund type. For instance, a Super could have an RITC of 65 while an IDPS could have an RITC of 68. The table allows maintaining the RITC rates and there is an archival mechanism where older rates are moved to the history table. Though GST RITC is a separate development, this feature allows configuring the RITC percentages per fund platform.

The legal entity application is enhanced to capture the TFN status at the legal entity level. The TFN status set at legal entity level is automatically defaulted at the portfolio level. In case the TFN status of a legal entity is modified, the change is reflected across all the linked portfolios.

The changes allow maintaining TFN Status at the legal entity level in addition to the portfolio level, which is important for operational reasons. The TFN Status is more accurately tracked along with the TFN Status effective date, so as to determine the applicability of the withholding taxes at the platform or payer level.

Abbreviations

Abbreviation/Term	Expansion/Description
TFN	Tax File Number (Tax Payers in Australia have a unique TFN)