• Amounts not included

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Some amounts that would normally be assessable if derived by a resident company are treated as notional exempt income in working out the attributable income of a CFC. Certain exemptions are also disregarded when working out attributable income. These exemptions have been replaced with similar provisions that are tailored for working out attributable income.

    Amounts taxed in Australia

    Amounts that have been taxed in full in Australia are not included in notional assessable income. Amounts will be treated as taxed in full if they have been included in a CFC's assessable income - for example, income sourced in Australia from a CFC's branch in Australia would normally be included in the CFC's assessable income in Australia. Amounts that will not be considered fully taxed, although subject to Australian taxation, are:

    • amounts subject to interest or dividend withholding tax
    • certain shipping income, film and video tape royalties and insurance premiums.

    Dividends that are franked under the imputation provisions are treated as notional exempt income.

    Branch in a broad-exemption listed country

    An amount derived by a CFC in an unlisted country from carrying on business through a permanent establishment - for example, a branch - in a broad-exemption listed country is excluded, provided that the amount has been comparably taxed. An amount will be treated as comparably taxed if it is subject to tax in a broad-exemption listed country and is not eligible designated concession income.

    Exclusion of dividends

    Most dividends paid to the CFC by a foreign company are not included in the notional assessable income of the CFC. The only dividends you must include for a CFC resident in an unlisted country are:

    • dividends that are not non-portfolio dividends - see chapter 3 - paid to the CFC
    • non-portfolio dividends paid to the CFC by a non-CFC that was a resident of an unlisted country when the dividends were paid unless the dividends were paid from profits taxed in a listed country.

    The only dividends you must include for a CFC resident in a limited-exemption listed country are:

    • dividends - other than non-portfolio dividends - paid to the CFC by a company that was a resident of an unlisted country when the dividends were paid
    • non-portfolio dividends paid to the CFC by a non-CFC that was a resident of an unlisted country when the dividends were paid, unless the dividends were paid from profits taxed in a listed country.

    These dividends will not be included in notional assessable income if they are paid from profits which have previously been attributed to you.

    Last modified: 05 Dec 2006QC 17522