PART X
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ATTRIBUTION OF INCOME IN RESPECT OF CONTROLLED FOREIGN COMPANIES
History
Pt X inserted by No 5 of 1991.
Division 7
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Calculation of attributable income of CFC
Subdivision B
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General modifications of Australian tax law
SECTION 402
ADDITIONAL NOTIONAL EXEMPT INCOME
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UNLISTED OR LISTED COUNTRY CFC
402(1)
[Application of section]
This section applies where the eligible CFC is a resident of either a listed country or an unlisted country at the end of the eligible period.
402(2)
[Notional exempt income]
Each of the following is notional exempt income of the eligible CFC in relation to the eligible period:
(a)
income or other amounts derived by the eligible CFC in the eligible period that are included in the assessable income of the eligible CFC of any year of income for the purposes of this Act apart from this Part, other than amounts that are so included under section
143
(where the proviso to that section does not apply);
(b)
so much of a frankable distribution, paid to the eligible CFC in the eligible period, as is either the franked part of the distribution, or the part of the distribution that has been franked with an exempting credit;
(c)
(Repealed by No 96 of 2004)
(e)
a premium paid or credited to the eligible CFC in the eligible period, where, because of the application of subsection
148(1)
for the purposes of this Act apart from this Part, the premium is not, for those purposes, allowable as a deduction to the person referred to in subparagraph
148(1)(a)(i)
and is not included in the assessable income of the eligible CFC.
History
S 402(2) amended by No 23 of 2005, No 96 of 2004, No 93 of 1999, No 174 of 1997, No 80 and No 35 of 1992 and No 48 of 1991.
402(2A)
(Repealed by No 114 of 2010)
History
S 402(2A) repealed by No 114 of 2010, s 3 and Sch 1 item 34, applicable in relation to statutory accounting periods ending in the 2010-11 year of income and later years of income. S 402(2A) formerly read:
402(2A)
If:
(a)
an amount would, apart from this subsection, be included in the notional assessable income of the eligible CFC for the eligible period under paragraph 384(2)(ca) or 385(2)(ca); and
(b)
at the end of the eligible period the CFC was authorised under the law of its place of residence to carry on life insurance business; and
(c)
at the end of that period the gross value of the CFC's assets for use in carrying on life insurance business was 50% or more of the gross value of all of the CFC's assets; and
(d)
during the eligible period a FIF within the meaning of Part XI managed funds of the CFC that were maintained by the CFC in a manner similar to the manner in which companies carrying on life insurance business in Australia maintain statutory funds under Part 4 of the
Life Insurance Act 1995
; and
(e)
the FIF was principally engaged during the eligible period in the management of funds of other persons by the investing of those funds at the discretion of the FIF;
then, so much of the amount referred to in paragraph (a) as relates to the FIF is notional exempt income of the eligible CFC in relation to the eligible period.
S 402(2A)(d) amended by No 5 of 1995.
S 402(2A), (2B), (2C) and (3) substituted for s 402(3) by No 190 of 1992.
402(2B)
(Repealed by No 114 of 2010)
History
S 402(2B) repealed by No 114 of 2010, s 3 and Sch 1 item 34, applicable in relation to statutory accounting periods ending in the 2010-11 year of income and later years of income. S 402(2B) formerly read:
402(2B)
A reference in paragraph (2A)(c) to the gross value of an asset of the CFC at the end of the eligible period is a reference to that value as shown in a balance-sheet of the CFC that was prepared as at the end of that period.
S 402(2A), (2B), (2C) and (3) substituted for s 402(3) by No 190 of 1992.
402(2C)
(Repealed by No 114 of 2010)
History
S 402(2C) repealed by No 114 of 2010, s 3 and Sch 1 item 34, applicable in relation to statutory accounting periods ending in the 2010-11 year of income and later years of income. S 402(2C) formerly read:
402(2C)
If, at the end of the eligible period, any of the CFC's assets (
"
the relevant assets
"
) are for use partly in carrying on life insurance business and partly for other purposes, a reference in paragraph (2A)(c) to the gross value at the end of that period of the CFC's assets for use in carrying on life insurance business is a reference to so much only of the gross value at the end of that period of the relevant assets as is proportionate to the extent to which they are for use at the end of that period in carrying on life insurance business.
S 402(2A), (2B), (2C) and (3) substituted for s 402(3) by No 190 of 1992.
402(3)
[Notional exempt income from attribution account payment]
If:
(a)
an attribution account entity makes an attribution account payment to the eligible CFC in the eligible period; and
(b)
apart from this subsection, the whole or part of the 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 attribution account payment, an attribution debit arises for the attribution account entity in relation to the eligible taxpayer;
then so much (if any) of the whole or the part of the attribution account payment as does not exceed the grossed-up amount of the attribution debit is notional exempt income of the eligible CFC for the eligible period.
History
S 402(2A), (2B), (2C) and (3) substituted for s 402(3) by No 190 of 1992.
402(4)
[
Effect of post FIF abolition debit]
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.
History
S 402(4) and (5) substituted for s 402(4) by No 114 of 2010, s 3 and Sch 1 item 35, applicable in relation to statutory accounting periods ending in the 2010-11 year of income and later years of income. S 402(4) formerly read:
402(4)
If:
(a)
a FIF attribution account entity makes a FIF attribution account payment 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 FIF attribution debit arises 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 FIF attribution debit is notional exempt income of the eligible CFC for the eligible period.
S 402(4) inserted by No 18 of 1993.
S 402 inserted by No 5 of 1991.
402(5)
[
Grossed up amount of the post FIF abolition debit]
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
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the amount of the debit; or
(b)
where subparagraph
23AK(3)(b)(ii)
applied in relation to the debit
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the amount of the debit, divided by the FIF attribution account percentage referred to in that subparagraph.
History
S 402(4) and (5) substituted for s 402(4) by No 114 of 2010, s 3 and Sch 1 item 35, applicable in relation to statutory accounting periods ending in the 2010-11 year of income and later years of income.
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