Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-H - Control of entities  

Foreign controlled Australian entity

SECTION 820-785   What is a foreign controlled Australian company?  

820-785(1)    
A company (except a *corporate limited partnership) is a foreign controlled Australian company (or an FCAC ) at a particular time if, and only if, at that time, it is an *Australian entity to which at least one of the following paragraphs applies:

(a) not more than 5 *foreign entities (each of which holds a *TC control interest in the company that is at least 1%) hold a total of TC control interests in the company that is 50% or more;

(b) a foreign entity holds a TC control interest in the company that is 40% or more, and no other entity or entities (except an *associate entity of the foreign entity or entities including the foreign entity or its associate entities) control the company;

(c) not more than 5 foreign entities control the company (whether or not with associate entities and whether or not any associate entity is a foreign entity).

Note:

A corporate limited partnership that is an Australian entity may be a foreign controlled Australian partnership, see section 820-795 .

Exception

820-785(2)    
Despite subsection (1), a company is not an FCAC at a particular time if, at that time:

(a) the company would, apart from this subsection, be an FCAC only because of paragraph (1)(a) or (b); but

(b) the total of the following interests would be less than 20% if paragraphs 820-875(2)(a) and (b) were disregarded:

(i) the *TC direct control interest in the company held by the *foreign entity or entities mentioned in paragraph (1)(a) or (b);

(ii) the *TC indirect control interest in the company held by the foreign entity or entities;

(iii) the TC direct control interests in the company held by any *associate entities of the foreign entity or entities (other than any TC direct control interests that have been taken into account in calculating the interest mentioned in subparagraph (ii));

(iv) the TC indirect control interests in the company held by the entity's associate entities (other than any TC indirect control interests that have been taken into account in calculating the interest mentioned in subparagraph (ii)).

Note:

Paragraphs 820-875(2)(a) and (b) set out special rules under which an entity is taken to hold a TC control tracing interest in another entity that is equal to 100%, which could then be taken into account in calculating a TC indirect control interest.