In some cases, the total of the attribution percentage of all attributable taxpayers may be more than 100%. In these cases, the aggregate is reduced to 100% by reducing proportionately the interest of each attributable taxpayer.
Example 8: Reduction where attribution percentage is more than 100%
A foreign company has two classes of shares on issue. Class A carries the right to vote but no income rights. Class B carries the right to income and is non-voting. An Australian resident - Res1 - owns 25% of the Class A shares and 75% of the Class B shares. Another resident owns the remaining shares in each class. The foreign company is a CFC and both residents are attributable taxpayers.
Res1's attribution percentage |
75% |
Res2's attribution percentage |
75% |
Total interest of residents |
150% |
Each attributable taxpayer's attribution percentage is reduced in proportion, so that the aggregate interests of all attributable taxpayers is 100%.
Res1's reduced attribution percentage
attribution percentage ÷ total interest of attributable taxpayers
75 ÷ 150 = 50%
Res2's reduced attribution percentage
attribution percentage ÷ total interest of attributable taxpayers
75 ÷ 150 = 50%
End of example