Income Tax Assessment Act 1936

PART X - ATTRIBUTION OF INCOME IN RESPECT OF CONTROLLED FOREIGN COMPANIES  

Division 7 - Calculation of attributable income of CFC  

Subdivision A - Basic principles  

SECTION 385   ADDITIONAL ASSUMPTION FOR LISTED COUNTRY CFC  

385(1)   [Notional exempt income]  

Where the eligible CFC is a resident of a listed country at the end of the eligible period, it is to be assumed:

(a) that the only amounts of notional assessable income are those to which subsection (2) applies; and

(b) that all other income is notional exempt income.

385(2)   [Notional assessable income]  

Subject to subsection (4), the amounts of notional assessable income are:

(a) amounts that would be included in the notional assessable income of the eligible CFC for the eligible period under this Act as modified in accordance with Subdivisions B to D if the only income or other amounts derived during the eligible period, and any earlier statutory accounting period, by the eligible CFC were:

(i) where the eligible CFC does not pass the active income test for the eligible period in relation to the eligible taxpayer - adjusted tainted income (within the meaning of section 386 ) that is eligible designated concession income in relation to the listed country or any other listed country; and

(ii) income or other amounts, of a kind specified in the regulations, that:

(A) are not eligible designated concession income of the eligible CFC in relation to the listed country or any other listed country; and

(B) are not treated as derived from sources in the listed country for the purposes of the tax law of the listed country; and

(C) pass the test set out in subsection (2A); and

(b) amounts included in the notional assessable income of the eligible CFC for the eligible period under section 102AAZD of this Act as modified in accordance with Subdivisions B to D; and

(c) amounts included in the notional assessable income of the eligible CFC for the eligible period under Division 6 of Part III of this Act as so modified, where either of the following conditions (but not necessarily the same condition) is satisfied in relation to the listed country and each other listed country:

(i) the amounts are not subject to tax in that listed country in a tax accounting period ending before the end of the eligible period or commencing during the eligible period;

(ii) the amounts are subject to tax in that listed country in such a tax accounting period and are designated concession income in relation to the listed country; and

(ca) (Repealed by No 114 of 2010)

(d) amounts that would be included in the notional assessable income of the eligible CFC for the eligible period under Division 5 of Part III of this Act, as modified in accordance with Subdivisions B to D of this Division, in relation to any partnership if its net income included only:

(i) where the eligible CFC does not pass the active income test for the eligible period in relation to the eligible taxpayer - amounts that would be included if the partnership derived only adjusted tainted income (within the meaning of section 386 ) that is eligible designated concession income in relation to the listed country or any other listed country; and

(ii) amounts that would be included if the partnership derived only income or other amounts, of a kind specified in the regulations, that:

(A) are not eligible designated concession income of the partnership in relation to the listed country or any other listed country; and

(B) are not treated as derived from sources in the listed country for the purposes of the tax law of the listed country; and

(C) pass the test set out in subsection (2A); and

(iii) amounts included under section 102AAZD of this Act as modified in accordance with Subdivisions B to D of this Division; and

(iv) amounts included under Division 6 of Part III of this Act as so modified, where either of the following conditions (but not necessarily the same condition) is satisfied in relation to the listed country and each other listed country:

(A) the amounts are not subject to tax in that listed country in a tax accounting period ending before the end of the eligible period or commencing during the eligible period;

(B) the amounts are subject to tax in that listed country in such a tax accounting period and are designated concession income in relation to the listed country.

(v) (Repealed by No 114 of 2010)

(e) (Repealed by No 64 of 2005)

385(2A)   [Test applied to income or other amounts]  

For the purposes of sub-subparagraphs (2)(a)(ii)(C) and (2)(d)(ii)(C), income or other amounts pass the test set out in this subsection if both:

(a) the income or other amounts are adjusted tainted income (within the meaning of section 386 ); and

(b) the income or other amounts are not subject to tax in the listed country or in any other listed country in a tax accounting period ending before the end of the eligible period or commencing during the eligible period.

385(3)   [Amounts subject to tax or not subject to tax]  

For the purposes of paragraph (2)(c) or (d), a reference in that paragraph to an amount being not subject to tax or subject to tax, as the case may be, includes a reference to another amount included in the net income of a partnership or trust, to which the first-mentioned amount is attributable, being not subject to tax or subject to tax.

385(4)   [Amounts not applicable under subsection (2)(a)]  

Where the sum of the amounts to which paragraph (2)(a) would otherwise apply does not exceed the lesser of:

(a) $50,000; and

(b) 5% of the gross turnover of the eligible CFC for the eligible period;

then that paragraph does not apply to those amounts.

385(5)   [Calculating gross turnover]  

In determining for the purposes of paragraph (4)(b) the gross turnover of the eligible CFC for the eligible period, section 434 has effect as if:

(a) subparagraph 434(1)(a)(i) were omitted; and

(b) the words " , but not including amounts that are shown in those recognised accounts as amounts covered by section 436 " were omitted from paragraphs 434(1)(b), (c) and (d) ; and

(c) the words " (other than an exclusion of amounts shown in those recognised accounts as amounts covered by section 436 ) " were omitted from subsection 434(2) .