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  • Summary sheet 4: Transferor trust and related measures

    The following summary sheet will help you to work out:

    • whether a transfer or deemed transfer of property or services you have made to a non-resident trust estate is subject to the transferor trust measures, and
    • whether you may be liable to pay additional tax in the form of an interest charge on distributions from a non-resident trust estate.

    1. Have you, at any time, transferred any property or services to a non-resident trust estate?

    Yes

    Go to question 2.

    No

    Go to question 13.

    Individuals, partnerships, trust estates, companies and superannuation funds also need to answer this question at the appropriate items on their tax returns.

    2. Have you, at any time, transferred any property or services to a non-resident trust estate that is a discretionary trust estate?

    Yes

    Go to question 4.

    No

    Go to question 3.

    3. Have you, after 7.30pm on 12 April 1989, transferred any property or services to a non-resident trust estate that is a non-discretionary trust estate for less than an arm’s-length amount?

    Yes

    Go to question 4.

    No

    Go to question 13.

    4. Have you made one or more transfers to a non-resident trust estate which is a public unit trust?

    Yes

    If none of the transfers to that public unit trust are subject to the transferor trust measures (see chapter 2), you are not an attributable taxpayer in relation to the public unit trust. Go to question 5.

    If one or more of the transfers to the public unit trust is subject to the measures, you are an attributable taxpayer in relation to the public unit trust. Go to both questions 5 and 10.

    No

    Go to question 5.

    5. Have you made one or more transfers to a non-resident trust estate under directions contained in a deceased person’s will or codicil, or a court order which varies the will or codicil?

    Yes

    If none of the exceptions applies to any one of the transfers (see chapter 2), you are not an attributable taxpayer in relation to the trust estate. Go to question 6.

    If one of the exceptions applies to any one of the transfers, you are an attributable taxpayer in relation to the trust estate. Go to both questions 6 and 10.

    No

    Go to question 6.

    6. Have you made one or more transfers to a non-resident trust estate that is a non-resident family trust?

    Yes

    If, at all times during your income year, the trust estate:

    • has been a non-resident family trust, you are not an attributable taxpayer in relation to the trust estate. Go to question 7.
    • has not been a non-resident family trust, you are an attributable taxpayer in relation to the trust estate. Go to both questions 7 and 10.

     

    No

    Go to question 7.

    7. Before migrating to Australia for the first time (provided you migrated after 12 April 1989) did you make a transfer to a non-resident trust estate before migrating?

    Yes

    If you were not in a position to control the trust estate between:

    • the commencement of the first income year after you became a resident, and
    • the end of your current income year

    you are not an attributable taxpayer in relation to the trust estate. Go to question 8.

    If you were in a position to control the trust estate between the two dates mentioned above, you are an attributable taxpayer in relation to the trust estate. Go to both questions 8 and 10.

    No

    Go to question 8.

    8. Did you make one or more transfers to any other non-resident trust estate that is a discretionary trust estate?

    Yes

    If none of the transfers to that discretionary trust estate are subject to the transferor trust measures, you are not an attributable taxpayer in relation to that trust estate. Go to question 9.

    If one or more of the transfers to that trust estate is subject to the measures, you are an attributable taxpayer in relation to that trust estate. Go to both questions 9 and 10.

    No

    Go to question 9.

    9. Did you make one or more transfers to any other non-resident trust estate that is a non-discretionary trust estate?

    Yes

    If none of the transfers to the non-discretionary trust estate are subject to the transferor trust measures, you are not an attributable taxpayer in relation to that non-discretionary trust estate.

    If you are an attributable taxpayer in relation to another non-resident trust estate, go to question 10. If not, go to question 13.

    If one or more of the transfers to that trust estate is subject to the measures, you are an attributable taxpayer in relation to that non-discretionary trust estate. Go to question 10.

    No

    If you are an attributable taxpayer in relation to another non-resident trust estate, go to question 10. If not, go to question 13.

    10. Do you have, or are you able to obtain, the necessary information to work out the net income of the non-resident trust estate?

    Yes

    Work out the amount of attributable income of the trust estate based on the net income calculation, then go to question 11.

    No

    Work out the amount of attributable income using the deemed rate of return approach. Include this amount in summary sheet 1. Then go to question 13.

    11. Is the non-resident trust estate a listed country trust estate?

    Yes

    Work out the total attributable income of all trust estates for which you are an attributable taxpayer.

    If that amount is equal to or less than the lesser of:

    $20,000, or

    10% of the total of the net incomes of each of those trust estates of the year of income in which you have an interest

    then include in your assessable income only the attributable income of any unlisted country trust estates. Go to question 12.

    No

    Go to question 12.

    12. Have you worked out an amount of attributable income of a non-resident trust estate other than that excluded by question 11?

    Yes

    Include the amounts in summary sheet 1. Then go to question 13.

    No

    Go to question 13.

    13. Have you received a distribution from a non-resident trust estate during your income year?

    Yes

    Work out the amount of the distribution to include in your assessable income. Then go to question 14.

    No

    You have finished this summary sheet.

    Individuals, partnerships, trust estates, companies and superannuation funds also need to answer the following question at the appropriate items on their tax returns.

    14. Have you included an amount in your assessable income for a trust distribution from a non-resident trust estate during your income year?

    Yes

    Work out the amount, if any, of the interest charge for the distribution to include on your tax return; see part 2 of chapter 2.

    No

    You have finished this summary sheet.

    Worksheet 1: Working out your control and attribution percentages

    Answer the following questions to determine:

    • if a foreign company is a CFC
    • if you are an attributable taxpayer in relation to a CFC
    • your attribution percentage.

    In the questions that follow, the test time is the end of the statutory accounting period of the foreign company that falls within your income year, or the time at which a dividend was paid by a foreign company. Fill out a separate worksheet for each test time.

    1. Have you or your associates held, or had an entitlement to acquire, any interest in a foreign company during the income year? The interest may be held directly or through other entities.

    Yes

    Go to question 2.

    No

    The CFC measures do not apply.

    2. Did you or your associates have an interest in the foreign company at the test time? The interest may be held directly or through other entities.

    Yes

    Go to question 3.

    No

    The CFC measures do not apply.

    3. What was your direct control interest in the foreign company at the test time?

    To work this out, take the highest of the following interests that you held, or were entitled to acquire, in the foreign company at the test time:

    • percentage of the total paid-up capital of the company            %
    • highest percentage of the total rights to vote, or participate in any decision making, concerning any of the following:          
      • making distributions of capital or profits           %
      • changing the constituent document           %
      • varying the share capital           %
       
    • percentage of the total rights to distributions of capital of the company on winding up           %
    • percentage of the total rights to distributions of profits of the company on winding up           %
    • percentage of the total rights to distributions of capital of the company other than on winding up           %
    • percentage of the total rights to distributions of profits of the company other than on winding up           %
    • Enter the highest percentage of the above interests at a:            
      • a           %
       

    4. At the test time, did any of your associates hold, or have an entitlement to acquire, a direct interest in the foreign company?

    Yes

    Work out the interest and enter it at b:           %

     

    No

    Go to question 5.

    5. At the test time, did you hold, or have an entitlement to acquire, an indirect control interest in the foreign company through another controlled foreign company, controlled foreign partnership or controlled foreign trust?

    Yes

    Work out the interest and enter it at c:           %

    Do not include interests taken into account in question 4.

     

    No

    Go to question 6.

    6. At the test time, did any of your associates hold, or have an entitlement to acquire, an indirect interest in the foreign company?

    Yes

    Work out the total of those interests and enter it at d:           %

    Do not include interests taken into account in questions 3, 4 or 5.

     

    No

    Go to question 7.

    7. At the test time, did you have an associate-inclusive control interest of 1% or more in the foreign company?

    To answer this, add the following amounts: 

    • your direct interest in the foreign company (from a question 3)             
      • a           %
       
    • your associates’ direct interest in the foreign company (from b question 4)             
      • b           %
       
    • your indirect interests in the foreign company (from c question 5)             
      • c           %
       
    • your associates’ indirect interests in the foreign company (from d question 6).             
      • d           %
       

    Total of (a + b + c + d) =           %

    This is your associate-inclusive control interest in the CFC.

    If your answer is less than 1%, the CFC measures do not apply.

    If it is 1% or more, go to question 8.

    8. At the test time, did five or fewer Australian entities, each with an associate-inclusive control interest of 1% or more, have a total associate-inclusive control interest of 50% or more in the foreign company?

    Yes

    The foreign company is a CFC. Go to question 11.

    No

    Go to question 9.

    9. At the test time, was there a single Australian entity whose associate-inclusive control interest in the company was at least 40%? Your answer is NO if the foreign company was controlled by an unassociated party or parties.

    Yes

    The foreign company is a CFC at the test time. Go to question 11.

    No

    Go to question 10.

    10. Is the foreign company in fact controlled by a group of five or fewer Australian entities, alone or with associates?

    Yes

    The foreign company is a CFC at the test time. Go to question 11.

    No

    The CFC measures do not apply.

    11. At the test time, did you have an associate-inclusive control interest of at least 10% in the CFC?

    Yes

    You are an attributable taxpayer. You must work out the attributable income of the CFC at the test time. Go to question 13.

    No

    Go to question 12.

    12. If the CFC is controlled by a group of five or fewer Australian entities, either alone or with associates, are you an Australian 1% entity who is one of those five entities?

    Yes

    You are an attributable taxpayer. Go to question 13.

    No

    The CFC measures do not apply.

    13. What is your direct attribution interest in the CFC?

    This is the same percentage as the direct control interest.

    Write the answer from at question 3 here.

              %

    Go to question 14.

     

    14. What is the total of your indirect attribution interests in the CFC?

    Do not include the interests of your associates.

              %

    Go to question 15.

     

    15. Add the answers to questions 13 and 14

    This is your attribution percentage in the CFC at the test time.

              %

    Worksheet 2: Working out the tainted income ratio for a controlled foreign company (CFC)

    You can use this worksheet to work out the tainted income ratio for a CFC.

    Show all amounts in the currency in which the accounts of the company are kept. Do not convert to Australian dollars.

    Part A Working out the CFC’s gross turnover

    Step 1

    Work out the CFC’s gross revenue as shown in the CFC’s accounts.

    • $               (a)

    Step 2

    Work out the following amounts included in (a). These amounts are to be excluded from gross turnover.

    Step 2 worksheet

    Category of gross revenue

    Amount

    Amounts already assessed to the CFC in Australia

    $

    Amounts derived through a branch in a listed country that are not EDCI in relation to any listed country and are subject to tax in a listed country

    $

    Non-portfolio dividends from a foreign company

    $

    Franked dividends

    $

    Dividends out of profits previously attributed

    $

    Trust amounts

    $

    Total

    (b)$

    Step 3

    Work out the following gross amounts included in (a).

    The net amounts are added back at step 4. Do not count amounts that fall in the categories listed in step 2.

    Step 3 worksheet

    Category

    Amount

    Revenue from commodity contracts

    $

    Revenue from exchange gains

    $

    Revenue from other asset disposals

    $

    Total

    (c)$

    Step 4

    Work out net gains to be included in gross turnover. Do not count amounts that fall in the categories listed in step 2

    Step 4 worksheet

    Category

    Amount

    Net commodity gain

    $

    Net exchange gain

    $

    Net gain from other asset disposals

    $

    Total

    (d)$

    Step 5

    Work out the CFC’s share of the gross turnover of partnerships in which the CFC is a partner (see worksheet 3).

    Step 5 worksheet

    Name of partnership

    Amount

    -

    $

    -

    $

    -

    $

    Total

    (e)$

    Gross turnover (a − b − c + d + e) = $________ (A)

    Part B Working out the CFC’s gross tainted turnover

    Step 1

    List amounts included in the CFC’s gross revenue after exclusions (item a from part A less items b and c from part A) that fall into the following categories of passive income.

    Step 1 worksheet

    Category of passive income

    Amount

    Tainted interest income

    $

    Annuities

    $

    Tainted royalty income

    $

    Tainted rental income

    $

    Dividends

    $

    Other passive income

    $

    Total

    (a)$

    Step 2

    Work out the CFC’s gross revenue that is tainted sales income after exclusions (item a from part A less items b and c from part A). $________ (b)

    Step 3

    Work out the CFC’s gross revenue that is tainted services income after exclusions (item a from part A less items b and c from part A). $________ (c)

    Step 4

    Work out the part of the CFC’s net gains included in gross turnover that are tainted income.

    Step 4 worksheet

    Category

    Amount

    Net commodity gain (from step 4 part A)

    $

    Net tainted commodity gain

    $

    Smaller amount

    $

    Net exchange gain (from step 4 part A)

    $

    Net tainted exchange gain

    $

    Smaller amount

    $

    Net gain from assets (from step 4 part A)

    $

    Net gain from tainted assets

    $

    Smaller amount

    $

    Total

    (d)$

    Step 5

    Work out the CFC’s share of the gross tainted turnover of partnerships in which the CFC is a partner. See worksheet 3.

    Step 5 worksheet

    Name of partnership

    Amount

    -

    $

    -

    $

    -

    $

    Total

    (e)$

    Gross tainted turnover (a + b + c + d + e) = $ ________ (B)

    Part C The tainted income ratio

    The tainted income ratio is as follows:

    Amount at B (gross tainted turnover) / Amount at A (gross turnover) = $ _______ (C)

    Last modified: 09 Sep 2021QC 66597