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  • Tax consequences of a change of residence of a CFC from an unlisted country to a listed country



    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 a listed country, a resident attributable taxpayer has to include in assessable income a share of the distributable profits of the CFC.

    The amount to be included is worked out in the same way as the amount that arises where an unlisted country CFC becomes a resident of Australia. However, a further adjustment is made to the CFC's distributable profits. The CFC is treated as having disposed of all of its assets for their market value at the time it changed residence. Accordingly, the distributable profits also include a net profit arising on the deemed disposal of those assets.

    Example 3
    Distributable profits

    Ausco owns 75% of a CFC that is a resident of an unlisted country. The CFC became a resident of a listed country on 1 July 2003. Its distributable profits at the time of change of residence were $30,000. This includes an amount of $10,000 that would arise if all the assets of the CFC were disposed of at the time of the change of residence.

    Ausco's assessable income will include the following amounts:



    Distributable profits on 1 July 2003


    Take away exempting profits




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


    Take away distribution surplus


    Amount to be included in Ausco's income for 1997-98


    Last modified: 05 Dec 2006QC 17522