Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX

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PART 4-5 - GENERAL

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Division 802 - Foreign residents ' income with an underlying foreign source

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Subdivision 802-A - Conduit foreign income

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History

Subdiv 802-A inserted by No 147 of 2005, s 3 and Sch 2 item 1, applicable to income years starting on or after 1 July 2005. No 147 of 2005, s 3 and Sch 2 items 27 and 28, contains the following additional application provisions:

27 Income years starting on 1 July 2005 or after that day and before Royal Assent
(1)
This item applies to an entity for whom an income year (the first year ) starts:

(a) on 1 July 2005; or

(b) after that day and before the day on which this Act receives the Royal Assent [ ie 14 December 2005].

(2)
The entity can only declare an amount to be conduit foreign income under Subdivision 802-A of the Income Tax Assessment Act 1997 on or after the day on which this Act receives the Royal Assent.

(3)
An FDA surplus that exists for the entity under Subdivision B of Division 11A of Part III of the Income Tax Assessment Act 1936 at the end of the day before the day on which this Act receives the Royal Assent has effect as if it were the entity's conduit foreign income under Subdivision 802-A of the Income Tax Assessment Act 1997 .

(4)
Any FDA credit under section 128TA of the Income Tax Assessment Act 1936 that arises during the period starting on 1 July 2005 and ending on the day before the day on which this Act receives the Royal Assent cannot also be conduit foreign income.

(5)
Section 802-40 of the Income Tax Asssessment Act 1997 , as inserted by item 1, does not apply to the first year.
28 Later starting income years
(1)
This item applies to an entity for whom an income year (also the first year ) starts on or after the day on which this Act receives the Royal Assent and before 1 July 2006.

(2)
The amendments made by items 7, 8, 9, 13 and 16, and 19 to 24 apply from the start of the first year.

(3)
An FDA surplus that exists for the entity under Subdivision B of Division 11A of Part III of the Income Tax Assessment Act 1936 at the start of the first year has effect as if it were the entity's conduit foreign income under Subdivision 802-A of the Income Tax Assessment Act 1997 .
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Operative provisions

SECTION 802-17 Trust estates and foreign resident beneficiaries - exempting CFI from Australian tax

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Foreign resident beneficiaries

802-17(1)
So much of a share of the net income of a trust as is reasonably attributable to the whole or a part of the *unfranked part of a *frankable distribution made by an *Australian corporate tax entity that the entity declares, in its *distribution statement, to be *conduit foreign income:

(a) is not assessable income and is not *exempt income of a beneficiary of the trust who:

(i) is a foreign resident; and

(ii) is presently entitled to the share of the income of the trust; and

(b) is an amount to which section 128B (Liability to withholding tax) of the Income Tax Assessment Act 1936 does not apply.

Note:

A frankable distribution to which a part of the net income of a trust is reasonably attributable may be made by the Australian corporate tax entity to the trust directly, or to the trust indirectly through one or more interposed trusts.

802-17(2)
The declaration must be made on or before the day on which the *distribution is made.

Note:

For a private company, this rule may bring forward the time at which the company is required to make its distribution statement: see section 202-75 .

Trusts

802-17(3)
The trustee of a trust is not to be assessed (and pay tax) under section 98 , 99 or 99A of the Income Tax Assessment Act 1936 in respect of so much of the net income of the trust as is *non-assessable non-exempt income of a beneficiary of the trust under subsection (1).

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