Income Tax Assessment Act 1936

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

Division 7 - Calculation of attributable income of CFC  

Subdivision C - Modifications relating to Australian capital gains tax  

SECTION 423   ADJUSTMENT OF CAPITAL PROCEEDS WHERE SECTION 47A APPLIES TO ROLLED-OVER ASSETS  

423(1)    
For the purposes of applying this Act in calculating the attributable income of the eligible CFC, in relation to the eligible period in relation to the eligible taxpayer, the following provision has effect.

423(2)    
The capital proceeds from a CGT event that happens in relation to a CGT asset of the eligible CFC during the eligible period are reduced if:

(a) either:

(i) because of Division 17 of former Part IIIA of this Act, that Part did not apply to the disposal of the asset to the eligible CFC by another CFC during the eligible period or an earlier statutory accounting period; or

(ii) there was a roll-over under Division 122 , 124 or 126 of the Income Tax Assessment Act 1997 (except under Subdivision 124-J , 124-K or 124-L of that Act) for a CGT event (the earlier CGT event ) that happened during that period in relation to the asset and involving the eligible CFC and another CFC; and

(b) the eligible taxpayer was an attributable taxpayer in relation to both CFC's at the time of the disposal or the earlier CGT event; and

(c) the other CFC is taken, under section 47A of this Act, to have paid the eligible CFC a dividend in relation to the disposal or the earlier CGT event; and

(d) an amount is included in the attributable taxpayer's assessable income in respect of the dividend under section 456 of this Act.

423(3)    
The reduction is the lesser of:

(a) the amount of the dividend; and

(b) the amount of any capital gain that:

(i) apart from Division 17 of former Part IIIA of this Act, would have accrued to the other CFC in respect of the disposal if the consideration in respect of the disposal had been the market value of the asset at the time of the disposal; or

(ii) the other CFC would have made from the earlier CGT event apart from the roll-over if the capital proceeds from that event had been the market value of the asset at the time of that event.