Overseas transactions

29 Overseas transactions

Was the aggregate amount of your transactions or dealings with international related parties (including the value of any property/service transferred or the balance of any loans) greater than $2 million?

If the answer to this question is no, print X in the No box at W. If the answer is yes, print X in the Yes box at W.

Did the thin capitalisation provisions apply?

Print X in the appropriate box at O. For more information, see appendix 3.

If the answer is yes for either label W or O, complete and attach an International dealings schedule 2013 to the tax return. Print X in the Yes box at Have you attached any 'other attachments'? at the top of page 1 of the tax return.

Where the trust is a member of a consolidated group for the whole income year and derived foreign income, the responsibility for preparing the schedule will rest on the head company of the consolidated group. Where a return is required because the trust had a period in the income year when it was not a member of a consolidated group (a non-membership period) the trust should complete an International dealings schedule 2013 where it has derived foreign income attributable to non-membership period.

The aggregate amount of the trust’s transactions or dealings is the total amount of all dealings, whether on revenue or capital account (including property transfers or service provision), and includes the balance of any loans or borrowings outstanding with international related parties. Transactions must not be netted off against each other: for example a $600,000 purchase from, and a $700,000 sale to, a related party should be treated as totalling $1,300,000, not $100,000.

International related parties are persons who are parties to international dealings that can be subject to section 136AD of the ITAA 1936 or the associated enterprises article of a relevant double tax agreement (DTA). The term includes the following:

• any overseas entity or person who participates directly or indirectly in the management, control or capital of the trust
• any overseas entity or person in respect of which the trust participated directly or indirectly in the management, control or capital
• any overseas entity or person in respect of which persons who participate directly or indirectly in its management, control or capital are the same persons who participate directly or indirectly in the management, control or capital of the trust.

‘Participates’ includes a right of participation, the exercise of which is contingent on an agreed event occurring. ‘Person’ has the same meaning as in subsection 6 (1) of the ITAA 1936 and section 995-1 of the ITAA 1997.

For more information as to the relevant degree of participation, see TR IT 2514 Income tax: Company Schedule 25A: Information return for companies that transact business with related overseas entities.

The type of dealings or transactions which will require the trust to complete an International dealings schedule 2013 are its dealings with related parties as above, such as an overseas holding company, overseas subsidiary, or non-resident trust in which the entity has an interest. These dealings or transactions may be the provision or receipt of services, or transactions in which money or property has been sent out of Australia, or received in Australia from an overseas source during the income year. They may include the transfer of tangible or intangible property, provision or receipt of services, or the provision or receipt of loans or financial services.

If money or property is not actually sent out of Australia or received in Australia, but accounting entries are made that have the effect of money or property being transferred, this is also to be taken as an international transaction.

Interest expenses overseas

Show at D the amount of interest paid to non-residents.

This amount should have been included at I item 5, plus or minus any reconciliation adjustment for interest expense that you include at B Expense reconciliation adjustments item 5.

If you include an amount at D, complete an International dealings schedule 2013.

An amount of tax (withholding tax) is generally withheld from interest paid or payable to non-residents, and from interest derived by a resident through an overseas branch. You must remit these amounts to the ATO. You cannot claim a deduction unless you have remitted any withholding tax to the Commissioner of Taxation. If you have withheld amounts from payments to non-residents, you may need to lodge a PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report by 31 October 2013. For more information, phone 13 28 66.

Do not use the trust return as a substitute for the PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report.

Royalty expenses overseas

Show at E the royalty expenses paid to non-residents during the income year.

If you include an amount at E, complete an International dealings schedule 2013.

This amount should have been included at J item 5, plus or minus any reconciliation adjustment for royalty expenses that you included at B 'Expense reconciliation adjustments' item 5.

An amount of tax (withholding tax) is generally withheld from royalties paid or payable to non-residents and from royalties derived by a resident through an overseas branch – you must remit this amount to the ATO. You cannot claim a deduction unless you have remitted any withholding tax to the Commissioner. If you have withheld amounts from payments to non-residents, you may need to lodge a PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report by 31 October 2013. For more information, phone 13 28 66.

Do not use the trust return as a substitute for the PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report.

Record keeping

Keep a record of the following:

• names and addresses of recipients
• amounts paid
• nature of the benefit derived, for example, a copy of the royalty agreement
• details of tax withheld where applicable and the date on which it was remitted to the ATO.

Non-resident beneficiaries

Was any beneficiary who was not a resident of Australia at any time during the income year ‘presently entitled’ to a share of the income of the trust?

If the answer to this question is no, print X in the No box at A. If the answer is yes, print X in the Yes box at A.

Ensure that the details of the beneficiaries and the assessable amounts of net income referable to the income of the trust estate to which each beneficiary, who is a non-resident at the end of the income year, is presently entitled are entered under Non-resident beneficiary additional information in J and K at the bottom of item 54 Statement of distribution. Do not include here the non-resident beneficiary's share of the trust income which is subject to non-resident withholding tax, such as withholding tax on interest, dividend and royalties. Instead, these amounts should be detailed in the additional information statement for the beneficiary and attached to the return.

If a beneficiary is a non-resident at the end of the income year and is presently entitled to a share of the income of the trust, the trustee is liable to tax on that share of the net income of the trust that is attributable to a period when the beneficiary was a resident, regardless of its source, and so much of the share of the net income that is attributable to a period where the beneficiary was a non-resident and is also attributable to Australian sources.

In the case of amounts covered by a withholding requirement, the trustee, at the time of distribution, deducts the tax payable and remits it to the ATO. If you have withheld amounts from payments to non-residents, you may need to lodge a PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report by 31 October 2013. For more information, phone 13 28 66.

Attach a statement for each beneficiary who was a non-resident of Australia at any time during the income year, and who was presently entitled to income of the trust, showing:

• full details of any distribution to the beneficiary, including amounts of interest, royalties, franked dividends and unfranked dividends
• if a withholding amount has been paid and remitted to the ATO from the distribution, the amount of such distribution and the withholding amount paid
• name and residential address
• if any change occurred in the residency status of the beneficiary during the income year, details of when the beneficiary became or ceased to be a resident
• if from any distribution (other than interest, dividend or royalty income subject to non-resident withholding tax) made to the beneficiary, tax has been deducted and remitted to the ATO, the amount of the credit claimed for remittances made
• if the trust is a fixed trust and at least 90% of its assets, held either directly or indirectly, are not taxable Australian property
• if it is contended that all or part of the non-resident beneficiary’s share of the income included income of the trust derived outside Australia and while the beneficiary was not a resident
  • the beneficiary’s share of that income
  • the basis of the contention that the beneficiary is not a resident of Australia.
   

Also provide evidence that:

• if no amounts have been transferred overseas, the beneficiary’s share of income has been applied for the benefit of the beneficiary or otherwise dealt with on behalf of the beneficiary
• the beneficiary has been notified of the entitlement.

Transactions with specified countries

Did you send any funds or property to, or receive any funds or property from, any of the countries listed below? This includes sending or receiving funds or property indirectly, through another entity or country.

Do you have the ability to control the disposition of any funds, property, investments, or any other assets located in any of the countries listed below? This includes:

• funds or assets may be located elsewhere, but are controlled or managed from one of the countries listed below, and
• where you have an expectation you are able to control the disposition of the funds or assets, or you have the capacity to control the disposition indirectly, for example, through associates.

Print X in the Yes box for yes, or X in the No box for no at C.

The specified countries are as follows:

Andorra	Liberia
Anguilla	Liechtenstein
Antigua and Barbuda	Marshall Islands
Aruba	Mauritius
Bahamas	Monaco
Bahrain	Montserrat
Belize	Nauru
Bermuda	Niue
British Virgin Islands	Panama
Cayman Islands	Saint Martin (Dutch part)
Cook Islands	Samoa
Curacao	San Marino
Cyprus	Seychelles
Dominica	St Kitts & Nevis
Gibraltar	St Lucia
Grenada	St Vincent & the Grenadines
Guernsey	Turks and Caicos Islands
Isle of Man	US Virgin Islands
Jersey	Vanuatu
Labuan