• Step 2 - Exclusion of comparably taxed amounts

    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

    Certain comparably taxed amounts are excluded from the active income test. They are:

    • a franked dividend
    • an amount included in the CFC's assessable income in any year of income, unless the amount is subject only to dividend or interest withholding tax or is not fully taxed - for example, certain shipping income or insurance premiums
    • an amount arising from the disposal of a taxable Australian asset - refer to section 3 of part 3 for an explanation of a taxable Australian asset
    • an amount that is an attribution account payment to the extent the profits from which the payment was made have previously been attributed to you
    • an amount derived through a branch in a broad-exemption listed country if the amount is taxed in that country - the exclusion does not apply to amounts derived in a CFC's country of residence or to amounts of eligible designated concession income
    • a non-portfolio dividend derived from a company resident in a listed country
    • a non-portfolio dividend derived from a company resident in an unlisted country if the underlying profit from which the dividend was paid has been taxed in a listed country - this is called the exempting profits part of the dividend.

    Because trust amounts arising to a CFC are attributed regardless of whether the CFC passes the active income test, they are also excluded from the test. So too are any dividends paid by an unlisted country CFC.

    Last modified: 05 Dec 2006QC 17522