Income Tax Assessment Act 1936

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

Division 8 - Active income test  

Subdivision B - Tainted income ratio  

SECTION 434   GROSS TURNOVER  

434(1)   [Amounts constituting gross turnover]  

Subject to section 437 , for the purposes of this Part, the gross turnover of a company of a statutory accounting period is the sum of:

(a) the amount that is shown in the recognised accounts of the company for the statutory accounting period as the gross revenue derived by the company, but not including:

(i) amounts that are shown in those recognised accounts as amounts covered by section 436 ; or

(ii) amounts that are shown in those recognised accounts as revenue in respect of the disposal of assets (other than trading stock or commodity futures contracts, commodity forward contracts or rights or options in respect of such contracts); or

(iii) amounts that are shown in those recognised accounts as revenue from disposing of commodity futures contracts, commodity forward contracts or rights or options in respect of such contracts; or

(iv) amounts that are shown in those recognised accounts as revenue from currency exchange rate fluctuations; and

(b) the amount that is shown in the recognised accounts of the company for the statutory accounting period as the amount (if any) by which the sum of the gains derived by the company in the statutory accounting period in respect of the disposal of assets (other than trading stock or commodity futures contracts, commodity forward contracts or rights or options in respect of such contracts) exceeds the losses incurred by the company in the statutory accounting period in respect of the disposal of such assets, but not including amounts that are shown in those recognised accounts as amounts covered by section 436 ; and

(c) the amount that is shown in the recognised accounts of the company for the statutory accounting period as the amount (if any) by which the gains derived by the company in the statutory accounting period from disposing of commodity futures contracts, commodity forward contracts or rights or options in respect of such contracts exceeds the losses incurred by the company in the statutory accounting period from disposing of commodity futures contracts, commodity forward contracts or rights or options in respect of such contracts, but not including amounts that are shown in those recognised accounts as amounts covered by section 436 ; and

(d) the amount that is shown in the recognised accounts of the company for the statutory accounting period as the amount (if any) by which the sum of the gains derived by the company in the statutory accounting period from currency exchange rate fluctuations exceeds the losses incurred by the company in the statutory accounting period from currency exchange rate fluctuations, but not including amounts that are shown in those recognised accounts as amounts covered by section 436 .

434(1A)   [Inclusions in agreement]  

In working out the gross turnover of a company of a statutory accounting period, assume that the amounts shown in the company ' s recognised accounts, as mentioned in paragraphs (1)(b) and (c), for that period had been worked out by also including:

(a) as gains derived by the company in that period - capital gains the company would have made; and

(b) as losses incurred by the company in that period - capital losses the company would have made;

in that period because of CGT event J1, if the assumptions in paragraphs 383(a) to (c) had applied.

Note 1:

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

Note 2:

Basically, the effect of the assumptions in paragraphs 383(a) to (c) 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.

434(2)   [Expressions used in recognised accounts]  

Subject only to sections 437 , 438 and 440 , for the purposes of this section, where a company has prepared recognised accounts for a statutory accounting period in accordance with commercially accepted accounting principles, then, in determining whether a particular amount shown in those accounts is covered by an expression used in subsection (1) (other than an exclusion of amounts shown in those recognised accounts as amounts covered by section 436 ), the expression concerned is taken to have the same meaning that it has under those accounting principles.

434(3)    

If:

(a) arm ' s length conditions are taken by Subdivision 815-B of the Income Tax Assessment Act 1997 to operate for purposes relating to the company; and

(b) had those conditions operated, an amount described in any of the paragraphs of subsection (1) as being an amount shown in the recognised accounts of the company for the statutory account period would have been different;

then the different amount is substituted for the amount shown in the recognised accounts.