Income Tax Assessment Amendment (Foreign Investment) Act 1992 (190 of 1992)

15   After section 160AFCD of the Principal Act the following sections are inserted

Foreign tax in respect of certain amounts assessable under section 529 from interest in foreign company

"160AFCE.(1) If:

(a) an amount ('the section 529 amount') is included in the assessable income of a taxpayer, being a company, of a year of income under section 529; and

(b) the section 529 amount was determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI in respect of a notional accounting period of a foreign company; and

(c) at the end of the notional accounting period the foreign company was related to the taxpayer; and

(d) an amount ('the gross deductible amount') is a notional deduction under that Subdivision from the foreign company's notional income of the notional accounting period because the foreign company paid an amount in respect of foreign tax;

subsection (2) has effect.

"(2) The taxpayer is taken, for the purposes of this Division, to have paid, and to have been personally liable for, in respect of the section 529 amount, in the year of income, an amount of foreign tax worked out using the formula:

The gross deductible amount * (Taxpayer's share of calculated profit of foreign company / Calculated profit of foreign company)

In the formula:

'Taxpayer's share of calculated profit of foreign company' means the share of the calculated profit of the foreign company in respect of the notional accounting period to which the taxpayer is entitled as determined under Subdivision D of Division 18 of Part XI;

'Calculated profit of foreign company' means the calculated profit of the foreign company in respect of the notional accounting period as determined under Subdivision D of Division 18 of Part XI.

Foreign tax if taypayer has indirect interest in foreign company

"160AFCF.(1) This section applies if:

(a) a taxpayer, being a company, had an interest in a foreign company ('the first tier foreign company') during the whole or a part of the notional accounting period of the first tier foreign company ('the relevant period') that ended in a year of income of the taxpayer ('the taxpayer's year of income'); and

(b) the first tier foreign company had an interest in another foreign company ('the second tier foreign company') during the whole or a part of the notional accounting period of the second tier foreign company that ended in the relevant period.

"(2) If:

(a) an amount is included in the notional income of the first tier foreign company of the relevant period under section 576; and

(b) an amount ('the section 529 amount') is included in the assessable income of the taxpayer of a year of income under section 529;

(c) the section 529 amount was determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI in respect of the notional accounting period of the first tier foreign company; and

(d) at the end of the notional accounting period of the second tier foreign company, the first tier foreign company and the second tier foreign company were related to the taxpayer; and

(e) an amount ('the gross deductible amount') is a notional deduction under that Subdivision from the second tier foreign company's notional income of that notional accounting period because the second tier foreign company paid an amount in respect of foreign tax;

subsection (3) has effect.

"(3) The taxpayer is taken, for the purposes of this Division, to have paid and to have been personally liable for, in respect of the section 529 amount (in addition to any foreign tax that the taxpayer is taken to have paid, and been personally liable for, under section 160AFCE), an amount of foreign tax worked out using the formula:

The gross deductible amount * (Taxpayer's share of calculated profit of second tier foreign company / Calculated profit of second tier foreign company)

For the purposes of this subsection:

'Taxpayer's share of calculated profit of second tier foreign company' means so much of the taxpayer's share of the calculated profit of the first tier foreign company in respect of the relevant period as is attributable to the taxpayer's indirect interest in the second tier foreign company;

'Calculated profit of first tier foreign company' means the calculated profit of that foreign company in relation to the relevant period as determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI;

'Calculated profit of second tier foreign company' means the calculated profit of the second tier foreign company in respect of the notional accounting period of that foreign company that ended in the relevant period as determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI.

Foreign tax in respect of certain amounts assessable under section 529 from interest in foreign trust

"160AFCG.(1) If:

(a) an amount ('the section 529 amount') is included in the assessable income of a taxpayer of a year of income under section 529; and

(b) the section 529 amount was determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI in respect of a notional accounting period of a foreign trust; and

(c) an amount ('the gross deductible amount') is a notional deduction under that Subdivision from the foreign trust's notional income of the notional accounting period because the foreign trust paid an amount in respect of foreign tax;

subsection (2) has effect.

"(2) The taxpayer is taken, for the purposes of this Division, to have paid, and to have been personally liable for, in respect of the section 529 amount, in the year of income, an amount of foreign tax worked out using the formula:

The gross deductible amount * (Taxpayer's share of calculated profit of foreign trust / Calculated profit of foreign trust)

In the formula:

'Taxpayer's share of calculated profit of foreign trust' means the share of the calculated profit of the foreign trust in respect of the notional accounting period to which the taxpayer is entitled as determined under Subdivision D of Division 18 of Part XI;

'Calculated profit of foreign trust' means the calculated profit of the foreign trust in respect of the notional accounting period as determined under Subdivision D of Division 18 of Part XI.

Foreign tax if taypayer has indirect interest in foreign trust

"160AFCH.(1) This section applies if:

(a) a taxpayer had an interest in a foreign trust ('the first tier foreign trust') during the whole or a part of the notional accounting period of the first tier foreign trust ('the relevant period') that ended in a year of income of the taxpayer ('the taxpayer's year of income'); and

(b) the first tier foreign trust had an interest in another foreign trust ('the second tier foreign trust') during the whole or a part of the notional accounting period of the second tier foreign trust that ended in the relevant period.

"(2) If:

(a) an amount is included in the notional income of the first tier foreign trust of the relevant period under section 576; and

(b) an amount ('the section 529 amount') is included in the assessable income of the taxpayer of a year of income under section 529;

(c) the section 529 amount was determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI in respect of the notional accounting period of the first tier foreign trust; and

(d) an amount ('the gross deductible amount') is a notional deduction under that Subdivision from the second tier foreign trust's notional income of the notional accounting period of the second tier foreign trust because the second tier foreign trust paid an amount in respect of foreign tax;

subsection (3) has effect.

"(3) The taxpayer is taken, for the purposes of this Division, to have paid and to have been personally liable for, in respect of the section 529 amount (in addition to any foreign tax that the taxpayer is taken to have paid, and been personally liable for, under section 160AFCG), an amount of foreign tax worked out using the formula:

The gross deductible amount * (Taxpayer's share of calculated profit of second tier foreign trust / Calculated profit of second tier) foreign trust)

For the purposes of this subsection:

'Taxpayer's share of calculated profit of second tier foreign trust' means so much of the taxpayer's share of the calculated profit of the first tier foreign trust in respect of the relevant period as is attributable to the taxpayer's indirect interest in the second tier foreign trust;

'Calculated profit of first tier foreign trust' means the calculated profit of that foreign trust in relation to the relevant period as determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI;

'Calculated profit of second tier foreign trust' means the calculated profit of the second tier foreign trust in respect of the notional accounting period of that foreign trust that ended in the relevant period as determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI.

Foreign tax in respect of amounts exempt under section 23AK

"160AFCJ.(1) If a FIF attribution account payment made to a resident taxpayer by a FIF attribution account entity in a year of income is, in whole or in part ('the section 23AK exempt part'), exempt from tax under section 23AK, the following provisions have effect.

"(2) The section 23AK exempt part is taken, for the purposes of paragraph 160AF(1)(a) but not (d), to be included in the taxpayer's assessable income of the year of income.

"(3) The taxpayer is taken for the purposes of this Division to have paid, and to have been personally liable for, in respect of thesection 23AK exempt part, in the year of income, an amount of foreign tax worked out using the formula:

((EP * DT) + (AEP * UT)) - AT.

In the formula:

'EP' (Exempt Percentage) means the percentage of the FIF attribution account payment represented by the section 23AK exempt part;

'DT' (Direct Tax) means any foreign tax that, disregarding this section and section 160AFC, the taxpayer is taken for the purposes of this Division to have paid, and to have been personally liable for, in respect of the FIF attribution account payment;

'AEP' (Adjusted Exempt Percentage) means the percentage that would be formula component EP if the FIF attribution account payment were reduced by any part of that payment that is exempt undersection 23AJ;

'UT' (Underlying Tax) means any foreign tax that, disregarding this section, the taxpayer is taken, for the purposes of this Division, to have paid, and to have been personally liable for, under section 160AFC or under subparagraph 6AB(3)(a)(ii) in respect of the FIF attribution account payment;

'AT' (Attributed Tax) means the amount of any FIF attributed tax account debit arising for the FIF attribution account entity in relation to the taxpayer on the making of the FIF attribution account payment, to the extent that the amount of the debit does not exceed the amount of the formula component AEP x UT.

Foreign tax if CFC has interest in FIF

"160AFCK.(1) This section applies if:

(a) a taxpayer, being a company, is an attributable taxpayer of a CFC for a statutory accounting period of the CFC ('the relevant period') that ended in a year of income of the taxpayer; and

(b) the calculation method set out in Subdivision D of Division 18 of Part XI was used to determine the amount of foreign investment fund income of a FIF that is included in the notional assessable income of the CFC for the relevant period.

"(2) If:

(a) an amount ('the section 529 amount') is included in the notional assessable income of the CFC for the relevant period under section 529; and

(b) an amount ('the section 456 amount') is included in the notional assessable income of the taxpayer of a year of income under section 456; and

(c) the section 529 amount was determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI in respect of the notional accounting period of the FIF; and

(d) an amount ('the gross deductible amount') is a notional deduction under that Subdivision from the FIF's notional income of that notional accounting period because the FIF paid an amount in respect of foreign tax; and

(e) if the FIF is a company, the CFC and the FIF were related to the taxpayer at the end of the notional accounting period of the FIF; and

(f) if the FIF is not a company, the CFC is related to the taxpayer at the end of the notional accounting period of the FIF;

subsection (3) has effect.

"(3) The taxpayer is taken for the purposes of this Division to have paid, and to have been personally liable for, in respect of the section 456 amount (in addition to any foreign tax that the taxpayer is taken to have paid, and to have been personally liable for, under section 160AFCA), an amount of foreign tax worked out using the formula:

The gross deductible amount * (Attribution credit arising for the FIF / Calculated profit of the FIF)

In the formula:

'Attribution credit arising for the FIF' means the attribution credit that, except for subsection 371(2D), would arise for the FIF under subsection 371(2A) at the end of the relevant period;

'Calculated profit of the FIF' means the calculated profit of the FIF in respect of the notional accounting period of the FIF that ended in the relevant period as determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI.".