Tax Laws Amendment (Foreign Source Income Deferral) Act (No. 1) 2010 (114 of 2010)

Schedule 1   Repeal of the FIF and deemed present entitlement rules

Part 2   Other amendments

Income Tax Assessment Act 1936

90   Subsection 461(1)

Repeal the subsection, substitute:

(1) If:

(a) it is necessary, for the purposes of applying a provision of this Act in the assessment of a taxpayer for a year of income, to take into account:

(i) the amount of consideration received, entitled to be received or taken to have been received, by the taxpayer in respect of the disposal of an asset; or

(ii) the capital proceeds from a CGT event happening in relation to a CGT asset;

being an asset that is an interest in an attribution account entity (the disposal entity ); and

(b) immediately before the disposal or CGT event takes place, either or both of the following conditions are satisfied:

(i) there is an attribution surplus for the disposal entity in relation to the taxpayer;

(ii) there is an attribution surplus for one or more other attribution account entities in relation to the taxpayer, where each such entity is one in which the taxpayer has an indirect attribution account interest held through the disposal entity;

then, for the purposes of this Act:

(c) the consideration or capital proceeds that, apart from this section, would be taken into account under the provision referred to in paragraph (a) in respect of the disposal or CGT event is, subject to subsection (3), taken to be reduced by so much of the amount of the attribution surplus, or sum of the attribution surpluses, as the case requires; and

(d) an attribution debit is taken to arise at the time of the disposal or the CGT event under section 372, in relation to the taxpayer, for each attribution account entity (the surplus entity ) in relation to which there is a surplus to which paragraph (c) applies; and

(e) the amount of the attribution debit is equal to so much of the surplus as is taken into account under paragraph (c); and

(f) there is no grossed-up amount in relation to the attribution debit under section 373.

Note: The heading to section 461 is replaced by the heading " Reduction of disposal consideration or capital proceeds if attributed income not distributed ".