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End of attention
Some amounts that would normally be assessable if derived by a resident company are treated as notional exempt income in working out the attributable income of a CFC. Certain exemptions are also disregarded when working out attributable income. These exemptions have been replaced with similar provisions that are tailored for working out attributable income.
Amounts taxed in Australia
Amounts that have been taxed in full in Australia are not included in notional assessable income. Amounts will be treated as taxed in full if they have been included in a CFC's assessable income - for example, income sourced in Australia from a CFC's branch in Australia would normally be included in the CFC's assessable income in Australia. Amounts that will not be considered fully taxed, although subject to Australian taxation, are:
- amounts subject to interest or dividend withholding tax
- certain shipping income, film and video tape royalties and insurance premiums.
Dividends that are franked under the imputation provisions are treated as notional exempt income.
Branch in a listed country
An amount of income or profits derived by a CFC in an unlisted country from carrying on a business through a permanent establishment (for example, a branch) in a listed country is excluded provided the amount is not eligible designated concession income in relation to any listed country.
Exclusion of dividends
Most dividends paid to a CFC by a foreign company are not included in the notional assessable income of the CFC. The only dividends you may need to include for a CFC that is resident in an unlisted country are dividends that are portfolio dividends paid to the CFC (see chapter 3).
Last modified: 05 Dec 2006QC 18000