House of Representatives
Taxation Laws Amendment (Foreign Income Measures) Bill 1997
Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Appendix F
Summary of the changes to the treatment of foreign branch income
The table below summarises the treatment of foreign branches of Australian companies before and after the changes to the foreign source income measures.
| Location of the branch | Treatment of branch income derived before 1 July 1997 | Treatment of branch income derived after 1 July 1997 |
|---|---|---|
| Listed country | Exempt under section 23AH if not EDCI and subject to tax in a listed country. | If broad-exemption listed country: No change; Exempt under section 23AH if not EDCI and subject to tax in a listed country. |
| If limited-exemption listed country: Exempt under section 23AH if not adjusted tainted income and subject to tax in a listed country. Amounts of adjusted tainted income (not including gains or profits of a capital nature) will also be exempt if the branch satisfies an active income test and the income is subject to tax in a listed country. | ||
| Branches of Australian financial institutions (AFIs) will be provided with an exclusion from adjusted tainted income for banking income broadly consistent with the exclusion available under the CFC measures for AFI subsidiaries. | ||
| Unlisted country | Not exempt under section 23AH, FTCS applies. | No change: Not exempt under section 23AH, FTCS applies. |
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