• Part 3: Working out attributable income and the amount to include in your assessable income

    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

    This part explains how to work out the attributable income of a CFC. Your share of the attributable income is included in your assessable income.

    Even if the CFC passes the active income test, you will still need to read on. Passing the test will eliminate many, but not all, types of attributed income and gains.

    Summary of part 3

    Section 1

    General assumptions for working out the attributable income of a CFC

    Section 2

    General modifications to the law

    Section 3

    Modifications to the treatment of capital gains and capital losses

    Section 4

    Quarantining of losses

    Section 5

    Working out the net income of a partnership

    Section 6

    Trust amounts

    Section 7

    Reduction of attributable income because of interim dividends

    Section 8

    Relief from double accruals taxation

    Section 9

    How much is included in assessable income

    Section 1: General assumptions for working out the attributable income of a CFC

    Attributable income is included directly in your assessable income. It is not necessary to aggregate amounts of attributable income as you trace through a chain of CFCs.

    Example 16
    Attribution directly to taxpayer

    Assume you wholly own a foreign company which, in turn, wholly owns another foreign company. Also assume that the first company has $300,000 attributable income and the second company has $200,000 attributable income.

    You include an amount in your assessable income as follows:

    Like this

    Not like this

    Do include $300,000 from the first company and $200,000 from the second in your income.

    Do not include $200,000 from the second company in the income of the first company, and $500,000 income from the first company in your own income

    Do include $300,000 from the first company and $200,000 from the second in your income

    Do not include $200,000 from the second company in the income of the first company, and $500,000 income from the first company in your own income

    Last modified: 14 Nov 2006QC 18505