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 2   Other amendments

Income Tax Assessment Act 1936

92   Section 613

Repeal the section, substitute:

613 Reduction of disposal consideration or capital proceeds if FIF attributed income not distributed

(1) If:

(a) it is necessary, for the purposes of applying a provision of this Act in the assessment of a taxpayer for a year of income, to take into account:

(i) the amount of consideration received, entitled to be received or taken to have been received, by the taxpayer in respect of the disposal of an asset; or

(ii) the capital proceeds from a CGT event happening in relation to a CGT asset;

being an asset that is an interest in a FIF attribution account entity; and

(b) immediately before the disposal or CGT event takes place there is a FIF attribution surplus for the FIF attribution account entity in relation to the taxpayer;

then, for the purposes of this Act:

(c) the consideration or capital proceeds that, apart from this section, would be taken into account under the provision referred to in paragraph (a) in respect of the disposal or CGT event is taken to be reduced by so much of the amount of the FIF attribution surplus as does not exceed the consideration or capital proceeds; and

(d) a FIF attribution debit is taken to arise at the time of the disposal or the CGT event under section 606, in relation to the taxpayer, for the FIF attribution account entity; and

(e) the amount of the FIF attribution debit is equal to so much of the surplus as is taken into account under paragraph (c).

(2) For the purposes of paragraph (1)(c), if the disposal of the asset or the CGT event causes the taxpayer's FIF attribution account percentage for the FIF attribution account entity to be reduced by a proportion, then only that proportion of the FIF attribution surplus for the entity is to be taken into account under that paragraph.