Income Tax Assessment Act 1936

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

Division 8 - Active income test  

Subdivision F - Special rules relating to AFI subsidiaries carrying on financial intermediary business  

SECTION 450   AFI SUBSIDIARIES - ASSET DISPOSALS AND CURRENCY TRANSACTIONS  

450(1)   [Income from trading in futures contracts, swaps etc.]  

The passive income, or the tainted services income, of a company of a statutory accounting period does not include income where the following conditions are satisfied:

(a) at the time the income was derived, the company was an AFI subsidiary whose sole or principal business was financial intermediary business;

(b) the income was derived from carrying on a business of trading in any or all of the following tainted assets:

(i) non-share futures contracts;

(ii) non-share forward contracts;

(iii) interest rates swap contracts;

(iv) currency swap contracts;

(v) forward exchange rate contracts;

(vi) forward interest rate contracts;

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

(viii) any similar financial instrument.

450(2)   [Disposal of futures contracts, swaps etc]  

For the purposes of this Part, in determining the net gains that accrued to a company in a statutory accounting period in respect of the disposal of tainted assets, where the following conditions are satisfied in relation to the disposal of a tainted asset:

(a) at the time of the disposal of the tainted asset, the company was an AFI subsidiary whose sole or principal business was financial intermediary business;

(b) the disposal was made in the course of carrying on that business;

(c) the tainted asset is covered by paragraph (1)(b);

the disposal of the tainted asset is to be disregarded.

450(3)   [Currency exchange gain or loss]  

For the purposes of this Part, in determining the net tainted currency exchange gains that accrued to a company during a statutory accounting period, where the following conditions are satisfied in relation to a particular currency exchange gain or a particular currency exchange loss:

(a) at the time the currency exchange gain or the currency exchange loss, as the case may be, was realised, the company was an AFI subsidiary whose sole or principal business was financial intermediary business;

(b) the currency exchange gain, or the currency exchange loss, as the case may be, was realised:

(i) in the course of carrying on that business; and

(ii) in the course of currency dealing;

that currency exchange gain or that currency exchange loss, as the case requires, is to be disregarded.

450(4)   [Income from trading in loans, debentures, bonds etc.]  

The passive income of a company of a statutory accounting period does not include income where the following conditions are satisfied:

(a) at the time the income was derived, the company was an AFI subsidiary whose sole or principal business was financial intermediary business;

(b) the income was derived from carrying on a business of trading in either of the following tainted assets:

(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.

450(5)   [Disposal of loans, debentures, bonds etc]  

For the purposes of this Part (other than subsection (7)), in determining the net gains that accrued to a company in a statutory accounting period in respect of the disposal of tainted assets, where the following conditions are satisfied in relation to the disposal of a tainted asset:

(a) at the time of the disposal of the tainted asset, the company was an AFI subsidiary whose sole or principal business was financial intermediary business;

(b) the disposal was made in the course of carrying on that business;

(c) the tainted asset is covered by paragraph (4)(b);

the disposal of the tainted asset is to be disregarded.

450(6)   [Trading income included in tainted services income]  

For the purposes of this Part, the tainted services income of a company of a statutory accounting period includes income from trading in assets where the following conditions are satisfied:

(a) at the time the income was derived, the company was an AFI subsidiary whose sole or principal business was financial intermediary business;

(b) the assets are covered by paragraph (4)(b);

(c) the assets were acquired from, or disposed of to, another entity where either of the following conditions are satisfied at the time of the acquisition or disposal:

(i) the entity was a Part X Australian resident, and the acquisition or disposal was not in connection with a business carried on by the entity at or through a permanent establishment of the entity in a listed or unlisted country;

(ii) the entity was not a Part X Australian resident, but the acquisition or disposal was in connection with a business carried on by the entity at or through a permanent establishment of the entity in Australia.

450(7)   [Net gains included in tainted services income]  

For the purposes of this Part, the tainted services income of a company of a statutory accounting period includes net gains that accrued to the company in the statutory accounting period in respect of the disposal of tainted assets, where the following conditions are satisfied:

(a) at the time of the disposal of the tainted asset, the company was an AFI subsidiary whose sole or principal business was financial intermediary business;

(b) the disposal was made in the course of carrying on that business;

(c) the tainted asset is covered by paragraph (4)(b);

(d) the tainted asset was acquired from, or disposed of to, another entity where either of the following conditions are satisfied at the time of the acquisition or disposal:

(i) the entity was a Part X Australian resident, and the acquisition or disposal was not in connection with a business carried on by the entity at or through a permanent establishment of the entity in a listed or unlisted country;

(ii) the entity was not a Part X Australian resident, but the acquisition or disposal was in connection with a business carried on by the entity at or through a permanent establishment of the entity in Australia.

450(8)   [Factoring income included in tainted income]  

For the purposes of this Part, the tainted services income of a company of a statutory accounting period includes factoring income where the following conditions are satisfied:

(a) at the time the income was derived, the company was an AFI subsidiary whose sole or principal business was financial intermediary business;

(b) the debt to which the factoring income relates was acquired from, or disposed of to, another entity where either of the following conditions are satisfied at the time of the acquisition or disposal:

(i) the entity was a Part X Australian resident, and the acquisition or disposal was not in connection with a business carried on by the entity at or through a permanent establishment of the entity in a listed or unlisted country;

(ii) the entity was not a Part X Australian resident, but the acquisition or disposal was in connection with a business carried on by the entity at or through a permanent establishment of the entity in Australia.