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Low-taxed third country income

Last updated 4 December 2006

The notional assessable income of a CFC in a listed country includes amounts derived from sources outside the CFC's country of residence if the amounts are of a kind specified in the Income Tax Regulations 1936. This rule does not apply to amounts of eligible designated concession income - these amounts may be included if the CFC fails the active income test.

FIF income

The foreign investment fund (FIF) rules apply when working out the attributable income of a CFC because of the assumption that the company is a resident of Australia. However, rules apply to prevent double taxation in instances where a company FIF is also a CFC. These rules provide an exemption from the FIF measures for an interest held by a CFC in a company FIF if a share of the attributable income of the company FIF is included in your assessable income under the CFC measures for:

  • a statutory accounting period coinciding with the notional accounting period of the company FIF for FIF taxation purposes, or
  • statutory accounting periods ending and commencing during the notional accounting period of the company FIF.

For the purposes of the above tests, the Tax Office will accept that a share of the attributable income of a company FIF has been included in the assessable income of an attributable taxpayer if no amount was included solely because the company FIF had no attributable income. See Taxation Determination TD 93/167 for further assistance.

QC18000