This question assesses the risk of notional assessable income and notional allowable deductions for CFCs not being correctly accounted for under the relevant tax legislation.
The dollar amounts or values asked for in this question are all based on your tax records.
23a Specify the amounts of notional assessable income
To complete question 23a, you must work out the notional assessable income amounts for 2019–20 for your CFCs in each of the following location categories:
- listed country
- specified country or jurisdiction
- other unlisted country or jurisdiction
At A, write the total amount of adjusted tainted income that is eligible designated concession income under section 385 of the ITAA 1936for your CFCs of listed countries.
At B, write the total amount of adjusted tainted income not treated as derived from sources in listed countries under section 385 of the ITAA 1936 for your CFCs of listed countries.
At C, write the total amount of other notional assessable income under section 385 of the ITAA 1936 for your CFCs of listed countries. Include any notional assessable income under section 385 for CFCs of listed countries that you have not already included at A and B.
At D, write the total of the amounts at A, B and C.
At E, write the total amount of adjusted tainted income under section 384 for your CFCs of specified countries or jurisdictions.
At F, write the total amount of other notional assessable income under section 384 for your CFCs of specified countries or jurisdictions. Include any notional assessable income under section 384 of the ITAA 1936 for CFCs of specified countries or jurisdictions that you have not already included at E.
At G, write the total of the amounts at E and F.
At H, write the total amount of adjusted tainted income under section 384 for CFCs of other unlisted countries or jurisdictions.
At I, write the total amount of other notional assessable income under section 384 for CFCs of other unlisted countries or jurisdictions. Include any notional assessable income under section 384 of the ITAA 1936 for CFCs of other unlisted countries or jurisdictions that you have not already included at H.
At J, write the total of the amounts at H and I.
At K, write the total of the amounts at D, G and J.
To help work out the amounts to include, see:
- section 384 of the ITAA 1936
- section 385 of the ITAA 1936
- adjusted tainted income under section 386 of the ITAA 1936
- adjusted tainted income that is eligible designated concession income under section 385 of the ITAA 1936, which types of eligible designated concession income are set out in Part 8, regulation 17 of the Income Tax Assessment (1936 Act) Regulation 2015
- notional assessable income under subsection 382(2) of the ITAA 1936
- other relevant provisions in Part X of the ITAA 1936.
Example 25
Listed countries |
Adjusted tainted income that is eligible designated concession income |
Adjusted tainted income not treated as derived from sources in listed countries |
Other notional assessable income |
|---|---|---|---|
UK |
$2,000,000 |
$0 |
$0 |
Japan |
$0 |
$0 |
$300,000 |
New Zealand |
$2,600,000 |
$1,800,000 |
$0 |
France |
$0 |
$0 |
$1,800,000 |
Total |
$4,600,000 |
$1,800,000 |
$2,100,000 |
A total notional assessable income amount of $8,500,000 is referrable to the CFCs in listed countries.
Specified countries or jurisdictions |
Adjusted tainted income |
Other notional assessable income |
|---|---|---|
Hong Kong |
$3,500,000 |
$1,600,000 |
Switzerland |
$2,000,000 |
$0 |
Singapore |
$1,600,000 |
$0 |
Total |
$7,100,000 |
$1,600,000 |
A total notional assessable income amount of $8,700,000 is referrable to the CFCs in specified countries or jurisdictions.
Other unlisted countries or jurisdictions |
Adjusted tainted income |
Other notional assessable income |
|---|---|---|
Denmark |
$1,700,000 |
$0 |
Portugal |
$1,200,000 |
$0 |
Total |
$2,900,000 |
$0 |
Total notional assessable income amount of $2,900,000 is referrable to the CFCs in other unlisted countries or jurisdictions.
The attributable taxpayer's total notional assessable income amount for all their CFCs is $20,100,000.
The Australian resident taxpayer (the attributable taxpayer) completes question 23a.
23b Specify the amounts of notional allowable deductions
To complete question 23b, you must work out the 2019–20 amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for your CFCs in each of the following location categories:
- listed country
- specified country or jurisdiction
- other unlisted country or jurisdiction.
At A, write the total amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for CFCs of listed countries.
At B, write the total amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for CFCs of specified countries or jurisdictions.
At C, write the total amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for CFCs of other unlisted countries or jurisdictions.
At D, write the total of the amounts at A, B and C.
To help work out the amounts to include, see for example:
- notional allowable deductions under subsection 382(2) of the ITAA 1936; notional allowable deductions also include your share of CFC losses, if any, that have been claimed as notional allowable deductions in calculating your CFC's attributable income
- subdivision B of division 7 of Part X of the ITAA 1936
- section 393 of the ITAA 1936
- section 394 of the ITAA 1936
- section 399A of the ITAA 1936
- other relevant provisions in Part X of the ITAA 1936.
Example 26
CFC country of residence |
Total amounts of notional allowable deductions from the notional assessable income of CFCs |
|---|---|
Listed countries |
$600,000 |
Specified countries or jurisdictions |
$200,000 |
Other unlisted countries or jurisdictions |
$0 |
Total |
$800,000 |
The total amount of notional allowable deductions from the notional assessable income of the CFCs in calculating the attributable income of all the CFCs is $800,000.
The Australian resident taxpayer (the attributable taxpayer) completes question 23b.