• Change of residence of a CFC from an unlisted country to Australia

    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

    If a CFC changes residence from an unlisted country to Australia, a resident taxpayer who is an attributable taxpayer of the CFC is taxable on the taxpayer's attribution percentage of the distributable profits of the CFC. However, the amount of the distributable profits that is taxable to a resident taxpayer does not include:

    • amounts that represent income which has been previously attributed or
    • if the resident taxpayer is a company with a non-portfolio interest in the CFC, the exempting profits of the CFC.

    Example 1
    Attribution percentage

    Ausco owns 75% of a CFC that is a resident of an unlisted country. The CFC became a resident of Australia on 1 July 2003. Its distributable profits at that time were $20,000.

    The amount included in the assessable income of Ausco for 1997-98 was 75% of $20,000 - that is, $15,000.

    Example 2
    Exempting profits

    Ausco owns 75% of a CFC that is a resident of an unlisted country. The CFC became a resident of Australia on 1 October 2003. Ausco's 2003-04 income year commenced on 1 October 2003, as did the statutory accounting period of the CFC. The accounting period of the CFC is accepted as its income year.

    The distributable profits of the CFC at the time of change of residence were as follows:

     

    $

    Exempting profits

    10,000

    Other profits

    20,000

    On 1 October 2003, Ausco had an attribution surplus of $10,000 in its attribution account for the CFC.

    The amount to be included in the assessable income of Ausco for 2003-04 was worked out as follows:

     

    $

    Distributable profits on 1 October 2003

    30,000

    Take away exempting profits

    10,000

     

    20,000

    Ausco's share (75% of 20,000)

    15,000

    Take away attribution surplus

    10,000

    Amount to be included in Ausco's income for 2003-04

    5,000

    Last modified: 05 Dec 2006QC 17522