• Interest, royalties, shipping and offshore income

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    Definitions from the regulations

    Interest income

    This term refers to interest and amounts in the nature of interest - for example, discounts - and amounts that would be assessable income under Division 16E of Part III of the Act if the entity deriving the amount were a resident of Australia.

    Royalties

    The term royalties has the same meaning as it has in subsection 6(1).

    Shipping income

    This term includes rental income from the leasing of ships and containers and income derived from normal shipping operations - that is, from the carriage of goods, passengers, mail and livestock.

    Offshore income

    This term is defined in the regulations as income derived by an entity from carrying on an:

    • offshore banking business
    • offshore financial business
    • offshore insurance business
    • offshore investment business, or
    • offshore re-insurance business.

    When are interest, royalties and shipping income not treated as designated income?

    Interest income and royalties are not to be regarded as designated concession income if they are taxed in a broad-exemption listed country on a withholding tax basis at the normal company tax rate that applies in the broad-exemption listed country.

    Shipping income derived from sources outside a broad-exemption listed country is not designated concession income if it is taxed on a withholding tax type basis in the country where it originates at a rate which is not less than 5% of the gross amount of shipping income.

    Last modified: 05 Dec 2006QC 17522