• Reduction of the attribution percentage where the total percentage is more than 100 per cent

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

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    In some cases, the total of the attribution percentage of all attributable taxpayers may be more than 100 per cent. In these cases, the aggregate is reduced to 100 per cent by reducing proportionately the interest of each attributable taxpayer.

    Example 8
    Reduction where attribution percentage is more than 100 per cent

    A foreign company has two classes of shares on issue. Class A carries the right to vote but no income rights. Class B carries the right to income and is non-voting. An Australian resident - Res1 - owns 25 per cent of the Class A shares and 75 per cent of the Class B shares. Another resident owns the remaining shares in each class. The foreign company is a CFC and both residents are attributable taxpayers.

    Res1's attribution percentage
    (greater of 25% and 75% )

    75%

    Res2's attribution percentage
    (greater of 75% and 25% )

    75%

    Total interest of residents

    150%

    Each attributable taxpayer's attribution percentage is reduced in proportion, so that the aggregate interests of all attributable taxpayers is 100 per cent.

    Res1's reduced
    attribution percentage

    =

    attribution percentage
    total interest of attributable taxpayers

     

    =

    75/[divided by]150 = 50%

    Res2's reduced
    attribution percentage

    =

    attribution percentage
    total interest of attributable taxpayers

     

    =

    75/[divided by]150 = 50%

    Last modified: 05 Dec 2006QC 17522