Tax Laws Amendment (Foreign Source Income Deferral) Act (No. 1) 2010 (114 of 2010)

Schedule 1   Repeal of the FIF and deemed present entitlement rules

Part 1   Main amendments

Income Tax Assessment Act 1936

35   Subsection 402(4)

Repeal the subsection, substitute:

(4) If:

(a) a FIF attribution account entity (within the meaning of former Part XI) makes a FIF attribution account payment (within the meaning of former Part XI) to the eligible CFC in the eligible period; and

(b) apart from this subsection, the whole or part of the FIF attribution account payment would be included in the notional assessable income of the eligible CFC in relation to the eligible taxpayer for the eligible period; and

(c) on the making of the FIF attribution account payment, a post FIF abolition debit arises under section 23AK for the FIF attribution account entity in relation to the eligible taxpayer;

so much (if any) of the whole or the part of the FIF attribution account payment as does not exceed the grossed-up amount of the post FIF abolition debit is notional exempt income of the eligible CFC for the eligible period.

(5) For the purposes of subsection (4), the grossed-up amount of the post FIF abolition debit is:

(a) where subparagraph 23AK(3)(b)(i) applied in relation to the debit - the amount of the debit; or

(b) where subparagraph 23AK(3)(b)(ii) applied in relation to the debit - the amount of the debit, divided by the FIF attribution account percentage referred to in that subparagraph.