Income Tax Assessment Act 1936

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

Division 1 - Preliminary  

SECTION 317   INTERPRETATION  

317(1)    

In this Part, unless the contrary intention appears:

accounting period
, in relation to company, means an accounting period used by the company in the accounts by reference to which it distributes dividends.

accounting records
includes invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes, vouchers and other documents of prime entry and also includes such working papers and other documents as are necessary to explain the methods and calculations by which accounts are made up.

accounts
means ledgers, journals, profit and loss accounts and balance-sheets, and includes statements, reports and notes attached to, or intended to be read with, any of the foregoing.

accruals tax law
, in relation to a listed country, means a law of the listed country that is declared by regulations for the purposes of this definition to be an accruals tax law.

active income test
has the meaning given by section 432 .

adjusted tainted income
has the meaning given by section 386 .

AFI
or Australian financial institution means any of the following Australian entities:

(a) a body corporate that is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959 ;

(b) a person who carries on State banking within the meaning of paragraph 51(xiii) of the Constitution;

(c) a registered entity under the Financial Sector (Collection of Data) Act 2001 ;

(d) a life assurance company.

AFI subsidiary
or Australian financial institution subsidiary has the meaning given by section 326 .

aircraft
means a machine or apparatus that can derive support in the atmosphere from the reactions of the air or from buoyancy, but does not include an air-cushion vehicle.

associate
has the meaning given by section 318 .

associate-inclusive control interest
has the meaning given by section 349 .

attributable income
has the meaning given by Division 7 .

attributable taxpayer
, has the meaning given by section 361 .

attributed tax account credit
(Repealed by No 143 of 2007 )

attributed tax account debit
(Repealed by No 143 of 2007 )

attributed tax account surplus
(Repealed by No 143 of 2007 )

attribution account entity
has the meaning given by section 363 .

attribution account payment
has the meaning given by section 365 .

attribution credit
has the meaning given by section 371 .

attribution debit
has the meaning given by section 372 .

attribution percentage
has the meaning given by section 362 .

attribution tracing interest
:

(a) in relation to a CFC - has the meaning given by section 358; and

(b) in relation to a CFP - has the meaning given by section 359 ; and

(c) in relation to a CFT - has the meaning given by section 360 .

Australian 1% entity
, in relation to a company or trust, means an Australian entity whose associate-inclusive control interest in the company or trust is at least 1%.

Australian entity
has the meaning given by section 336 .

Australian partnership
has the meaning given by section 337 .

Australian tax
means income tax or withholding tax.

Australian trust
has the meaning given by section 338 .

broad-exemption listed country
(Repealed by No 96 of 2004)

CFC
or controlled foreign company has the meaning given by section 340 .

CFE
or controlled foreign entity has the meaning given by section 339 .

CFP
or controlled foreign partnership has the meaning given by section 341 .

CFT
or controlled foreign trust has the meaning given by section 342 .

CGT roll-over provisions
means former section 160ZZF and Divisions 5A, 5B, 7A and 17 of former Part IIIA of this Act or Divisions 122 , 124 and 126 , and section 118-350 , of the Income Tax Assessment Act 1997 .

commodity
means any thing that is capable of delivery under an agreement for its delivery, but does not include an instrument creating or evidencing a chose in action.

commodity investment
means:

(a) either of the following contracts:

(i) a forward contract in respect of a commodity;

(ii) a futures contract in respect of a commodity; or

(b) a right or option in respect of such a contract.

company
does not include a company in the capacity of trustee.

company title interest
, in relation to land, means a right of occupancy of the land, or of a building or part of a building erected on the land, arising by virtue of the holding of shares, or by virtue of a contract to purchase shares, in a company that owns the land or building.

control tracing interest
:

(a) in relation to a CFC - has the meaning given by section 353 ; or

(b) in relation to a CFP - has the meaning given by section 354 ; or

(c) in relation to a CFT - has the meaning given by section 355 .

currency exchange gain
, in relation to a company, in relation to a statutory accounting period, means a currency gain realised by the company in the statutory accounting period, to the extent to which it is attributable to currency exchange rate fluctuations.

currency exchange loss
, in relation to a company, in relation to a statutory accounting period, means a currency loss realised by the company in the statutory accounting period, to the extent to which it is attributable to currency exchange rate fluctuations.

de facto marriage
(Repealed by No 144 of 2008)

de facto relationship
means:

(a) a relationship between 2 persons (whether of the same sex or different sexes) that is registered under a law of a State or Territory prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; or

(b) a relationship between 2 persons (whether of the same sex or different sexes) who, although not legally married to each other, live with each other on a genuine domestic basis in a relationship as a couple.

depreciation provision
means:

(a) any of former sections 54 to 62 of Division 3 of Part III of this Act, any provision of former Divisions 10, 10AAA, 10AA, 10A, 10C and 10D of that Part; or

(b) any provision of Division 40 of the Income Tax Assessment Act 1997 (other than Subdivision 40-E ) or of Division 43 of that Act; or

(c) any provision of the former Division 42 of that Act (other than Subdivisions 42-L and 42-M), or the former Subdivisions 330-A, 330-C, 330-H and 387-G of that Act.

designated concession income
, in relation to a listed country, means:

(a) income or profits of a kind specified in the regulations if:

(i) foreign tax imposed by a tax law of the country is not payable in respect of the income or profits because of a particular feature; or

(ii) foreign tax imposed by a tax law of the country is payable in respect of the income or profits but there is a feature in relation to that tax;

and the feature is of a kind specified in the regulations; or

(b) capital gains that would be made because of CGT event J1, if the assumptions in paragraphs 383(a) to (c) applied.

Note 1:

CGT event J1 is about companies ceasing to be related after a roll-over.

Note 2:

Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.

direct attribution account interest
has the meaning given by section 366 .

direct attribution interest
has the meaning given by section 356 .

direct control interest
:

(a) in relation to a company - has the meaning given by section 350 ;

(b) in relation to a trust - has the meaning given by section 351 .

discretionary trust
means a trust where:

(a) both of the following conditions are satisfied:

(i) a person (who may include the trustee) is empowered (either unconditionally or on the fulfilment of a condition) to exercise any power of appointment or other discretion;

(ii) the exercise of the power or discretion, or the failure to exercise the power or discretion, has the effect of determining, to any extent, either or both of the following:

(A) the identities of those who may benefit under the trust;

(B) how beneficiaries are to benefit, as between themselves, under the trust; or

(b) one or more of the beneficiaries under the trust have a contingent or defeasible interest in some or all of the corpus or income of the trust; or

(c) the trustee of another trust, being a trust where both of the conditions in paragraph (a) are satisfied, benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the first-mentioned trust.

disposal
of an asset includes:

(a) redemption; and

(b) CGT event J1 happening in relation to the asset (about companies ceasing to be related after a roll-over) if the assumptions in paragraphs 383(a) to (c) applied.

Note:

Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.

distributable profits
, in relation to a company, means the amount, whether of an income or capital nature, that, having regard to the accounts of the company and such other matters as may reasonably be regarded as relevant, constitutes profits of the company that would be available for distribution by the company by way of dividends if there were disregarded any requirement of the constituent document, or of any resolution or decision, of the company restricting the availability of the profits for distribution in that way, other than any requirement providing for an eligible provision or reserve.

double tax agreement
, in relation to a foreign country, means:

(a) if there is only one agreement (within the meaning of the International Tax Agreements Act 1953 ) in force in respect of the foreign country - that agreement; or

(b) if there are 2 or more agreements (within the meaning of that Act) in force in respect of the foreign country - the agreement that is expressed to be:

(i) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income; or

(ia) concerning the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income; or

(ii) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital; or

(iii) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital; or

(iv) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains; or

(v) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital and to certain other taxes.

eligible designated concession income
, in relation to a listed country, in relation to a particular period (in this definition called the income period ), means designated concession income in relation to the listed country:

(a) that is not subject to tax in another listed country in a tax accounting period:

(i) ending before the end of the income period; or

(ii) commencing during the income period; or

(b) that is:

(i) subject to tax in another listed country in a tax accounting period:

(A) ending before the end of the income period; or

(B) commencing during the income period; and

(ii) designated concession income in relation to that other listed country.

eligible finance share
has the meaning given by section 327 .

eligible finance share dividend
means a dividend in respect of an eligible finance share.

eligible provision or reserve
means:

(a) a provision or reserve required to be maintained by law; or

(b) a provision for any liability in respect of foreign tax or Australian tax; or

(c) a reserve maintained for the purpose of qualifying for relief from foreign tax; or

(d) a provision or reserve for depreciation, bad or doubtful debts or leave payments; or

(e) any other provision or reserve of a kind prescribed by regulations for the purposes of this paragraph.

eligible transferor
has the meaning given by sections 347 and 348 .

entitled to acquire
has the meaning given by section 322 .

entity
means any of the following:

(a) a company;

(b) a partnership;

(c) a person in the capacity of trustee;

(d) any other person.

exempting profits
(Repealed by No 96 of 2004)

exempting profits percentage
(Repealed by No 96 of 2004)

exempting receipt
(Repealed by No 96 of 2004)

factoring income
means income derived from carrying on a business of factoring.

FlF attribution account entity
(Repealed by No 114 of 2010)

FIF attribution account payment
(Repealed by No 114 of 2010)

FIF attribution debit
(Repealed by No 114 of 2010)

financial intermediary business
means:

(a) banking business; or

(b) a business whose income is principally derived from the lending of money.

general insurance company
means a company whose sole or principal business is insurance business within the meaning of subsection 3(1) of the Insurance Act 1973 , but does not include a life assurance company.

goods
includes:

(a) ships, aircraft and other vehicles; and

(b) animals, including fish; and

(c) minerals, trees and crops, whether on, under or attached to land or not; and

(d) gas and electricity.

grossed-up amount ,
in relation to an attribution debit, has the meaning given by section 373 .

gross tainted turnover
has the meaning given by section 435 .

gross turnover
has the meaning given by section 434 .

group
includes:

(a) one entity alone; and

(b) a number of entities the members of which are not in any way associated with each other nor acting together.

income interest in a partnership
means an interest in the profits of the partnership.

income interest in a trust
means an interest in the income of the trust.

indirect attribution account interest
has the meaning given by section 369 .

indirect attribution interest
has the meaning given by section 357 .

indirect control interest
has the meaning given by section 352 .

IP time
means 7.30 p.m., by standard time in the Australian Capital Territory, on 12 April 1989.

law
, in relation to a listed country or an unlisted country, means a law of that listed country or unlisted country, or of any part of, or place in, that listed country or unlisted country.

lease
includes a sublease and, in relation to a company title interest in land, includes an agreement similar to a lease or sublease.

leased
includes let on hire (including a letting on hire that is described in the relevant agreement as a lease) under an agreement other than a hire-purchase agreement.

life assurance company
(Repealed by No 89 of 2000)

life assurance policy
(Repealed by No 89 of 2000)

life assurance premiums
(Repealed by No 89 of 2000)

limited-exemption listed country
(Repealed by No 96 of 2004)

listed country
has the meaning given by section 320 .

member of a non-portfolio company group
(Repealed by No 143 of 2007 )

net tainted commodity gains
has the meaning given by section 443 .

net tainted currency exchange gains
has the meaning given by section 444 .

non-attributable income period
, in relation to a taxpayer in relation to a company in relation to the application of a provision of this Act in accordance with Division 7 , means a statutory accounting period of the company for which:

(a) there is no requirement to calculate under Division 7 the attributable income of the company in relation to the taxpayer; or

(b) there is a requirement to calculate under Division 7 the attributable income of the company in relation to the taxpayer, but the particular provision is not relevant to that calculation.

non-broad-exemption listed country
(Repealed by No 96 of 2004)

non-discretionary trust
means a trust other than a discretionary trust.

non-portfolio dividend
means a dividend (other than an eligible finance share dividend or a widely distributed finance share dividend) paid to a company where that company has a voting interest, within the meaning of section 334A , amounting to at least 10% of the voting power, within the meaning of that section, in the company paying the dividend.

non-resident family trust
has the meaning given by section 328 .

non-share forward contract
means a forward contract that is not in respect of shares or a share price index.

non-share futures contract
means a futures contract that is not in respect of shares or a share price index.

notional allowable deduction
has the meaning given by subsection 382(2) .

notional assessable income
has the meaning given by subsection 382(2) .

notional exempt income
has the meaning given by subsection 382(2) .

Part X Australian resident
means a resident within the meaning of section 6 , but does not include an entity where:

(a) there is a double tax agreement in force in respect of a foreign country; and

(b) that agreement contains a provision that is expressed to apply where, apart from the provision, the entity would, for the purposes of the agreement, be both a resident of Australia and a resident of the foreign country; and

(c) that provision has the effect that the entity is, for the purposes of the agreement, a resident solely of the foreign country.

passive income
has the meaning given by section 446 .

premium income
means:

(a) premiums in respect of insurance or reinsurance; or

(b) life assurance premiums.

profits
includes gains, whether of an income or capital nature.

property management services
includes any of the following services:

(a) cleaning;

(b) secretarial;

(c) catering.

provide
, in relation to services, includes allow, confer, give, grant or perform.

public unit trust
has the meaning given by section 329 .

recognised accounts
:

(a) in relation to a company, in relation to a statutory accounting period, means the accounts referred to in subparagraph 432(1)(c) that are prepared by the company for the statutory accounting period; or

(b) in relation to a partnership in which a company is a partner at any time during a statutory accounting period, means the accounts referred to in paragraph 437(1)(b) that are prepared by the partnership for the statutory accounting period.

rent
means any consideration (in this definition called a rental consideration ) paid or given by a lessee under a lease and includes consideration (whether paid or given by a lessee or another person) in the nature of a rental consideration.

residency assumption
, in relation to a CFC, means the assumption about the residence of the CFC that is made in paragraph 383(a).

retention period
, in relation to a statutory accounting period, means the period of 5 years commencing at the end of the statutory accounting period.

sale
, in relation to goods, includes exchange or hire-purchase and purchase , when used in relation to goods, has a corresponding meaning.

services
includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under:

(a) an arrangement for or in relation to:

(i) the performance of work (including work of a professional nature), whether with or without the provision of property; or

(ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or

(iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; or

(b) a contract of insurance; or

(c) an arrangement for or in relation to the lending of money.

ship
means a vessel or boat of any description, and includes:

(a) an air-cushion vehicle; and

(b) any floating structure.

special excluded rental income
, in relation to a company, in relation to a statutory accounting period, means income derived by the company in the statutory accounting period by way of rent, where:

(a) the income was derived by the company from a CFC; and

(b) at all times during the statutory accounting period when the income accrued:

(i) the CFC was an associate of the company; and

(ii) the company was a resident of a particular listed country or a particular unlisted country; and

(iii) the CFC was also a resident of that listed country or that unlisted country, as the case may be; and

(c) the income was taxed in that listed country or that unlisted country, as the case may be, at the country ' s normal company tax rate (see section 325 ); and

(d) the income would not have been, in whole or in part, a notional allowable deduction of the CFC if it were assumed that the CFC had failed to pass the active income test in relation to any statutory accounting period of the CFC.

statutory accounting period
has the meaning given by section 319 .

subject to tax
has the meaning given by section 324 .

tainted asset
, in relation to a company, means:

(a) any of the following:

(i) loans (including deposits with a bank or other financial institution);

(ii) debenture stock, bonds, debentures, certificates of entitlement, bills of exchange, promissory notes or other securities;

(iii) shares in a company;

(iv) an interest in a trust or partnership;

(v) futures contracts;

(vi) forward contracts;

(vii) interest rate swap contracts;

(viii) currency swap contracts;

(ix) forward exchange rate contracts;

(x) forward interest rate contracts;

(xi) life assurance policies;

(xii) a right or option in respect of such a loan, security, share, interest, contract or policy;

(xiii) any similar financial instrument; or

(b) an asset that was held by the company solely or principally for the purpose of deriving tainted rental income; or

(c) an asset other than:

(i) trading stock; or

(ii) any other asset used solely in carrying on a business;

but does not include a commodity investment.

tainted commodity gain
, in relation to a company, in relation to a statutory accounting period, means:

(a) a gain realised by the company in the statutory accounting period from disposing of a tainted commodity investment; or

(b) a capital gain that the company would have made in the statutory accounting period because CGT event J1 would have happened in relation to a tainted commodity investment, if the assumptions in paragraphs 383(a) to (c) applied.

Note:

Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.

tainted commodity investment
, in relation to a company, means:

(a) either of the following contracts:

(i) a forward contract in respect of a commodity;

(ii) a futures contract in respect of a commodity; or

(b) a right or option in respect of such a contract;

except where either of the following conditions is satisfied:

(c) both of the following subparagraphs apply:

(i) the company carries on:

(A) a business of producing or processing the commodity; or

(B) a business that involves the use of the commodity as a raw material in a production process;

(ii) the contract, right or option relates to the carrying on of that business;

(d) both of the following subparagraphs apply in relation to the contract:

(i) the contract was entered into by the company for the sole purpose of eliminating or reducing the risk of adverse financial consequences that might result for the company, under another contract, from fluctuations in the price of the commodity;

(ii) the company does not and will not derive tainted sales income from a transaction under that other contract.

tainted commodity loss
, in relation to a company, in relation to a statutory accounting period, means:

(a) a loss realised by the company in the statutory accounting period from disposing of a tainted commodity investment; or

(b) a capital loss that the company would have made in the statutory accounting period because CGT event J1 would have happened in relation to a tainted commodity investment, if the assumptions in paragraphs 383(a) to (c) applied.

Note:

Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.

tainted currency exchange gain
, in relation to a company, in relation to a statutory accounting period, means a currency exchange gain realised by the company in the statutory accounting period except where the gain related to an active income transaction (within the meaning of section 439 ).

tainted currency exchange loss
, in relation to a company, in relation to a statutory accounting period, means a currency exchange loss realised by the company during the statutory accounting period except where the loss related to an active income transaction (within the meaning of section 439 ).

tainted income ratio
has the meaning given by section 433 .

tainted interest income
, in relation to a company, means:

(a) interest or a payment in the nature of interest; or

(b) an amount that, if the company were a resident within the meaning of section 6 , would be included in assessable income under Division 16E of Part III (or would be so included if Division 230 of the Income Tax Assessment Act 1997 did not apply); or

(c) factoring income;

but does not include:

(d) income (being interest, fees, commission or other amounts) derived by a person in respect of offshore banking transfers of the person; or

(e) income consisting of dividends or non-share dividends paid to a person by a company out of profits derived from the making of offshore banking transfers.

tainted rental income
(other than special excluded rental income), in relation to a company, in relation to a statutory accounting period, means income derived by the company in the statutory accounting period by way of rent in respect of any of the following:

(a) a lease to which an associate of the company was a party at the time the income was derived;

(b) a lease where any or all of the rent was paid or given by an associate of the company;

(c) a lease of land, except where the following conditions are satisfied:

(i) the land is situated in a listed country or in an unlisted country;

(ii) at all times during the period when the income accrued, the company was a resident of that country;

(d) a lease of land where the following conditions are satisfied:

(i) the land is situated in a listed country or in an unlisted country;

(ii) at all times during the period when the income accrued, the company was a resident of that country;

(iii) it is not the case that a substantial part of the income is attributable to the provision of labour-intensive property management services in connection with the land, being services provided by directors or employees of the company;

(e) a lease of either of the following:

(i) a ship;

(ii) an aircraft;

except where a substantial part of the income is attributable to the provision by the directors or employees of the company of any of the following in relation to the ship or aircraft concerned:

(iii) operating crew services;

(iv) maintenance services;

(v) management services;

(f) a lease of either of the following:

(i) a cargo container designed or intended for use on ships or aircraft as part of a containerised cargo handling system;

(ii) plant or equipment designed or intended for use on board ships;

except where a substantial part of the income is attributable to the provision by the directors or employees of the company of either of the following in relation to the container, plant or equipment concerned:

(iii) maintenance services;

(iv) management services.

tainted royalty income
, in relation to a company, means royalties derived by the company except where all of the following conditions are satisfied:

(a) the royalties are derived in the course of a business carried on by the company;

(b) at the time the royalties were derived, the entity liable to pay the royalties was not an associate of the company;

(c) either of the following subparagraphs applies:

(i) the matter or thing in respect of which the royalty is consideration originated with the company;

(ii) the company has substantially developed, altered or improved that matter or thing with the result that its market value was substantially enhanced.

tainted sales income
has the meaning given by section 447 .

tainted services income
has the meaning given by section 448 .

tax accounting period
, in relation to an entity, in relation to a foreign tax imposed by a tax law of a listed country, means the accounting period used by the entity for the purposes of determining the tax base under that law.

tax detriment
has the meaning given by section 330 .

tax law
, in relation to a listed country or an unlisted country, means:

(a) if the listed country or the unlisted country has federal foreign tax and either or both of the following:

(i) State foreign tax;

(ii) municipal foreign tax;

the law of the listed country or the unlisted country that imposes the federal foreign tax; or

(b) in any other case - the law of the listed country or the unlisted country that imposes foreign tax.

transitional finance share
has the meaning given by section 327B .

transitional finance share dividend
means a dividend in respect of a transitional finance share.

trust
means:

(a) an entity in the capacity of trustee (including an entity that manages a trust if there is no trustee); or

(b) as the case requires, a trust or trust estate.

unlisted country
has the meaning given by section 320 .

widely distributed finance share
has the meaning given by section 327A .

widely distributed finance share dividend
means a dividend in respect of a widely distributed finance share.

317(2)    

Where, if all offshore borrowings made by persons when they were offshore banking units were taken to be tax exempt loan money of the persons for the purposes of Division 11A of Part III , an offshore loan, or other transfer, of an amount by a person would, for the purposes of that Division, be an offshore loan, or other transfer, of tax exempt loan money of the person, the offshore loan, or other transfer, of the amount is an offshore banking transfer of the person for the purposes of the definition of tainted interest income .