• What branch capital gains are non-assessable non-exempt income?

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    Capital gains derived by a resident company on disposal of plant, equipment, land and buildings that are used wholly or principally for deriving foreign income through a branch in a listed company is non-assessable non-exempt income if:

    • the whole of the gain is subject to tax in the country in which the branch is located, and
    • the asset was used at some time in the income year in which is was disposed of, or in the previous year, in carrying on business through the branch.

    Non-assessable non-exempt income treatment will not apply to a gain derived by a branch in a broad-exemption listed country if the gain gives rise to an amount of eligible designated concession income. Similarly, non-assessable non-exempt income treatment will not apply to a gain derived by a branch in a limited-exemption listed country if the gain gives rise to an amount of adjusted tainted income.

    Non-assessable non-exempt income treatment is also available if the above conditions are satisfied for capital gains arising on the disposal of assets on the closure of a branch.

    Disposals of assets other than those mentioned above, such as goodwill, will be subject to Australian tax.

    Last modified: 05 Dec 2006QC 17522