Income Tax Assessment Act 1936

PART IVA - SCHEMES TO REDUCE INCOME TAX  

SECTION 177L   DIVERTED PROFITS TAX - SUFFICIENT FOREIGN TAX TEST  

177L(1)    
This section applies in relation to the relevant taxpayer, in relation to the DPT tax benefit, if the amount worked out under subsection (2) (foreign tax liability) equals or exceeds 80% of the amount worked out under subsection (6) (reduced Australian tax liability).

Foreign tax liability

177L(2)    
The amount is the total of the increases in liability for foreign income tax (within the meaning of the Income Tax Assessment Act 1997 ) of each entity covered by subsection (5) that results, will result, or may reasonably be expected to result, from the scheme during a foreign tax period that corresponds to the year of income mentioned in paragraph 177J(1)(a) .

177L(3)    
The regulations may provide for a method of working out increases in foreign tax liability for the purposes of subsection (2):

(a) for all situations; or

(b) for specified situations.

177L(4)    
If the regulations provide for such a method, apply that method in working out increases in foreign tax liability for the purposes of subsection (2) in relevant situations.

177L(5)    
An entity is covered by this subsection if:

(a) the entity is a foreign entity; and

(b) the entity is the relevant taxpayer or an associate (within the meaning given by section 318 ) of the relevant taxpayer; and

(c) the entity:

(i) is the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme; or

(ii) is otherwise connected with the scheme or any part of the scheme.

Reduced Australian tax liability

177L(6)    
The amount is:

(a) if the DPT tax benefit is a tax benefit mentioned in paragraph 177C(1)(a) , (b), (ba) or (bc) - the amount of the tax benefit multiplied by the standard corporate tax rate; or

(b) otherwise - the amount of the DPT tax benefit.

177L(7)    
If the relevant taxpayer must withhold an amount in respect of withholding tax as a result of the tax benefit, reduce the amount worked out under subsection (6) by the amount withheld.