• Overview of the calculation

    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 you are an attributable taxpayer, your assessable income may include a share of the profit, if any, from certain types of income and gains of the CFC. The profit of the CFC is called attributable income and is worked out before taking into account your share of the profit - called your attribution percentage.

    You work out attributable income based on the existing rules for working out the taxable income of a resident company. However, not all of the profits of a CFC are taken into account in working out the attributable income of the CFC.

    The general rule

    The general rule is that only amounts that arise from certain transactions which are classified as prone to tax minimisation are taken into account - called 'tainted income'. These will only be taken into account if a CFC is not mainly engaged in genuine business activities - that is, where the CFC fails the active income test.

    Exception for a listed country

    An exception to the general rule is made for a CFC that is resident in a listed country and derives certain untaxed income or gains (of a kind specified in the Income Tax Regulations 1936) from sources outside listed countries. These amounts are taken into account whether or not the CFC passes the active income test.

    Exception for trust amounts

    Another exception to the general rule is for certain trust amounts derived by a CFC. These will be taken into account whether or not the CFC passes the active income test.

    Exception for foreign investment fund income

    Income arising under the foreign investment fund (FIF) measures will also be taken into account even if the CFC passes the active income test.

    Exception for comparably taxed amounts

    Amounts are generally only taken into account if they are not taxed in full in Australia or comparably taxed in a listed country. Amounts arising in a listed country are assumed to be comparably taxed if they do not qualify as eligible designated concession income as described in schedule 9 of the Income Tax Regulations 1936 and in appendix 1.

    Last modified: 05 Dec 2006QC 18000