New International Tax Arrangements (Participation Exemption and Other Measures) Act 2004 (96 of 2004)

Schedule 3   Tainted services income

Part 1   Amendments

Income Tax Assessment Act 1936

5   After subsection 448(1)

Insert:

(1A) Income of the company is covered by this subsection if:

(a) it is income from the provision of services by the company to an entity under a scheme (within the meaning of the Income Tax Assessment Act 1997); and

(b) the entity is an associate of the company; and

(c) those services are received by another entity; and

(d) the other entity satisfies either of these requirements:

(i) the other entity was a Part X Australian resident at the time the income was derived, and the services were not received in connection with a business carried on by the other entity at that time at or through a permanent establishment of the other entity in a listed or unlisted country;

(ii) the other entity was not a Part X Australian resident at the time the income was derived, and the services were received in connection with a business carried on by the other entity at that time at or through a permanent establishment of the other entity in Australia; and

(e) the income would be tainted services income if:

(i) this section did not include paragraph (1)(g) or this subsection; and

(ii) the income were from the provision of those services by the company to the other entity; and

(f) a reasonable person would conclude (having regard to all the circumstances) that the scheme was entered into or carried out for a purpose, other than an incidental purpose, of enabling entities satisfying the requirements of subparagraph (d)(i) or (ii) to receive those services.