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What branch capital gains are non-assessable non-exempt income?

Last updated 4 December 2006

Permanent establishment in a listed country

A resident company includes in the calculation of its net capital gains any capital gain or capital loss as a result of a CGT event happening in relation to a tainted asset that is used in carrying on a business through a permanent establishment in a listed country if:

  • the gain is also eligible designated concession income, or
  • there is a loss but there would have been eligible designated concession income if the loss had instead been a gain.

Permanent establishment in an unlisted country

A resident company includes in the calculation of its net capital gains any capital gain or capital loss arising as a result of a CGT event happening in relation to a tainted asset that is used in carrying on a business through a permanent establishment in an unlisted country.

Effect of non-assessable non-exempt income treatment on a resident company's deductions, losses and foreign tax credits

A deduction is not allowable for:

  • outgoings or expenses connected to branch income and gains that are non-assessable non-exempt income
  • capital losses on the disposal of a branch asset if, had there been a profit on the disposal, the profit would have been non-assessable non-exempt income.

Current year losses or carried forward losses of a resident company are not reduced by branch income or gains that are non-assessable non-exempt income.

Foreign tax credits are not allowed for foreign taxes paid on branch income that is non-assessable non-exempt income.

QC18000