Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 830 - Foreign hybrids  

Subdivision 830-C - Special rules applicable while an entity is a foreign hybrid  

Note:

In the case of a foreign hybrid company, references in this Subdivision that relate to partnerships are to be read subject to Subdivision 830-B . For example, a reference to a partner will be a reference to a shareholder in the company who is treated by Subdivision 830-B as a partner.

SECTION 830-75   Extended meaning of subject to foreign tax  

Where entity becomes a partner

830-75(1)    
If:

(a) an entity becomes a partner (the first partner ) in a *foreign hybrid in relation to an income year; and

(b) a gain or profit of a capital nature accrues to another partner as a result of the disposal of the whole or part of that other partner's interest in an asset of the foreign hybrid that happens when the first partner becomes a partner; and

(c) apart from this subsection, the gain or profit is not *subject to foreign tax in a *listed country in any *tax accounting period; and

(d) if the foreign hybrid had disposed of the whole or an equivalent part of the asset at the time of the disposal of the whole or the part of the interest, any gain or profit of a capital nature that accrued to the foreign hybrid in respect of the disposal would have been subject to foreign tax in a listed country in a tax accounting period;

then, for the purposes of Part X of the Income Tax Assessment Act 1936 , the gain or profit mentioned in paragraph (b) is taken to be subject to foreign tax in the listed country, and in the tax accounting period, mentioned in paragraph (d).

Where partner increases its interest

830-75(2)    
If:

(a) an entity is a partner (the first partner ) that increases its interest in a *foreign hybrid in relation to an income year; and

(b) a gain or profit of a capital nature accrues to another partner as a result of the disposal of the whole or part of that other partner's interest in an asset of the foreign hybrid that happens when the first partner increases its interest in the foreign hybrid; and

(c) apart from this subsection, the gain or profit is not *subject to foreign tax in a *listed country in any *tax accounting period; and

(d) if the foreign hybrid had disposed of the whole or an equivalent part of the asset at the time of the disposal of the whole or the part of the interest, any gain or profit of a capital nature that accrued to the foreign hybrid in respect of the disposal would have been subject to foreign tax in a listed country in a tax accounting period;

then, for the purposes of Part X of the Income Tax Assessment Act 1936 , the gain or profit mentioned in paragraph (b) is taken to be subject to foreign tax in the listed country, and in the tax accounting period, mentioned in paragraph (d).

Where entity ceases to be a partner

830-75(3)    
If:

(a) an entity ceases to be a partner in a *foreign hybrid in relation to an income year; and

(b) a gain or profit of a capital nature accrues to the entity as a result of the disposal of its interest in an asset of the foreign hybrid that happens when the entity ceases to be a partner; and

(c) apart from this subsection, the gain or profit is not *subject to foreign tax in a *listed country in any *tax accounting period; and

(d) any gain or profit of a capital nature that accrues to the entity as a result of the disposal of its interest in the foreign hybrid that happens when the entity ceases to be a partner is subject to foreign tax in a listed country in a tax accounting period;

then, for the purposes of Part X of the Income Tax Assessment Act 1936 , the gain or profit mentioned in paragraph (b) is taken to be subject to foreign tax in the listed country, and in the tax accounting period, mentioned in paragraph (d).

Where partner disposes of part of its interest

830-75(4)    
If:

(a) an entity is a partner that disposes of part of its interest in a *foreign hybrid in relation to an income year; and

(b) a gain or profit of a capital nature accrues to the entity as a result of the disposal of part of its interest in an asset of the foreign hybrid that happens when the entity disposes of the part of its interest in the foreign hybrid; and

(c) apart from this subsection, the gain or profit is not *subject to foreign tax in a *listed country in any *tax accounting period; and

(d) any gain or profit of a capital nature that accrues to the entity as a result of the disposal of the part of its interest in the foreign hybrid is subject to foreign tax in a listed country in a tax accounting period;

then, for the purposes of Part X of the Income Tax Assessment Act 1936 , the gain or profit mentioned in paragraph (b) is taken to be subject to foreign tax in the listed country, and in the tax accounting period, mentioned in paragraph (d).