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  • Section C: Interests in foreign entities

    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

    Question 21

    This question is one of a number dealing with controlled foreign companies (CFCs) and controlled foreign trusts (CFTs). These questions are for the purpose of understanding your interests in and dealings with these overseas entities and assessing compliance with the relevant tax legislation.

    Question 21a Did you have any interests in CFCs or CFTs?

    An interest in a CFC or CFT may be either direct or indirect, and has the same meaning as given in Division 3 of Part X of the ITAA 1936.

    To complete this question, you must identify whether you had an interest in any CFCs or CFTs at the end of the income year. If you had an interest in a CFC or CFT, answer Yes at A item 21a and complete items 21b, 21c, 21d, 21e, and questions 22 and 23.

    Question 21b Specify the number of CFCs and CFTs in which you had an interest at the end of your income year.

    At B, C and D of 21b:

    • Identify the CFCs and CFTs in which if you had an interest at the end of your income year. Then, referring to the tables at Appendix 1 and Appendix 3, identify the category of the country of residency of each CFC or CFT.
    • At B, write the number of your CFCs and CFTs identified as residents of listed countries.
    • At C, write the number of your CFCs and CFTs identified as residents of specified countries or jurisdictions.
    • At D, write the number of your CFCs and CFTs identified as residents of other unlisted countries or jurisdictions.

    If the number of CFCs and CFTs is:

    • less than 10, write zero zero (00) as the first two digits and then write the number, for example, write 009
    • less than 100, write zero (0) as the first digit and then write the number, for example, write 083
    • more than 999, write 999
    • zero, leave the relevant answer blank.

    Example

    Jack Brothers & Co had at the end of their income year the following:

    • two German resident CFTs
    • three Japanese resident CFCs
    • one Cayman Islands resident CFT.

    As Germany and Japan are listed countries, they wrote 005 at B to record its five listed country CFTs and CFCs at the end of its income year.

    At C they wrote 001 to record its specified country or jurisdiction CFT.

    They left the remaining box blank.

    This image shows an example of how to complete Question 21.

    End of example

    Question 21c Did you acquire any interests in CFCs or CFTs during the income year?

    If you acquired any associate-inclusive control interest in a CFC or CFT during the income year, answer Yes at A item 21c.

    The associate-inclusive control interest has the meaning given by section 349 of the ITAA 1936.

    At B, C and D of 21c:

    • Identify the CFCs and CFTs in which you acquired any associate-inclusive control interest during the income year. Then, referring to the tables at Appendix 1 and Appendix 3, identify the category of the country of residency of each CFC or CFT.
    • At B, write the number of CFCs and CFTs resident in listed countries in which you acquired any associate-inclusive control interest during the income year.
    • At C, write the number of CFCs and CFTs resident in specified countries or jurisdictions in which you acquired any associate-inclusive control interest during the income year.
    • At D, write the number of CFCs and CFTs residents in other unlisted countries or jurisdictions in which you acquired any associate-inclusive control interest during the income year.

    If the number of CFCs and CFTs in which you acquired any associate-inclusive control interest during the income year is:

    • less than 10, write zero zero (00) as the first two digits and then write the number, for example, if the number is 9 write 009
    • less than 100 but not less than 10, write zero (0) as the first digit and then write the number, for example, if the number is 83 write 083
    • more than 999, write 999.

    If you did not acquire any interests in CFCs or CFTs of any of the three categories of the country of residency during the income year, write zero (0) for that category.

    Example

    During the income year, an Australian resident taxpayer (attributable taxpayer) acquired associate-inclusive control interest in following CFCs and CFTs:

    CFC or CFT

    Country of residence

    Section 349 associate-inclusive control interest

    Transaction dates

    CFC

    Canada

    100% direct control interest

    2 July

    CFT

    USA

    65% indirect control interest

    1 October

    CFC

    UK

    85% direct control interest held by an associate of the attributable taxpayer

    15 January

    CFC

    Singapore

    additional 70% direct control interest (the attributable taxpayer already held 20% direct control interest)

    7 November

    CFT

    Belgium

    100% direct control interest

    3 February

    CFC

    South Africa

    35% direct control interest

    16 April

    21c Did you acquire any interests in CFCs or CFTs during the income year? items completed, Yes with X for 'Specify the number of CFS or CFTs of which you acquired any interests during the income year, B Listed countries 003, C Specified countries 001 and D Other unlisted countries 002.

    End of example

    Question 21d Did you dispose of any interests in CFCs or CFTs during the income year?

    If you disposed any associate-inclusive control interest in a CFC or CFT during the income year, answer Yes at A item 21d.

    The associate-inclusive control interest has the meaning given by section 349 of the ITAA 1936.

    At B, C and D of item 21d:

    • Identify the CFCs and CFTs in which you disposed any associate-inclusive control interest during the income year. Then, referring to the tables at Appendix 1 and Appendix 3, identify the category of the country of residency of each CFC or CFT.
    • At B, write the number of CFCs and CFTs resident in listed countries in which you disposed any associate-inclusive control interest during the income year.
    • At C, write the number of CFCs and CFTs resident in specified countries or jurisdictions in which you disposed any associate-inclusive control interest during the income year.
    • At D, write the number of CFCs and CFTs resident in other unlisted countries or jurisdictions in which you disposed any associate-inclusive control interest during the income year.

    If the number of CFCs and CFTs is:

    • less than 10, write zero zero (00) as the first two digits and then write the number, for example, if the number is 9 write 009
    • less than 100 but not less than 10, write zero (0) as the first digit and then write the number, for example, if the number is 83 write 083
    • more than 999, write 999.

    If you did not dispose any interests in CFCs or CFTs of any of the three categories of the country of residency during the income year, write 0 (zero).

    Example

    During the income year, an Australian resident taxpayer (the attributable taxpayer) disposed associate-inclusive control interest in following CFCs and CFTs:

    CFC or CFT

    Country of residence

    Section 349 associate-inclusive control interest

    Transaction dates

    CFC

    Canada

    100% direct control interest (the CFC in Canada, in which the attributable taxpayer acquired 100% direct control interest on 2 July)

    31 May

    CFC

    New Zealand

    100% direct control interest (the attributable taxpayer held the 100% direct control interest for the last 5 years)

    20 September

    CFC

    Sweden

    17% indirect control interest held by the attributable taxpayer ((the attributable taxpayer held a total of 85% indirect control interest for the last 3 years)

    30 November

     

    21d Did you dispose of any interests in CFCs or CFTs during the income year? items completed, Yes with X for 'Specify the number of CFS or CFTs of which you disposed any interests during the income year, B Listed countries 002, C Specified countries 000 and D Other unlisted countries 001.

    End of example

    Question 21e Have your CFCs in the following countries satisfied the active income test for their statutory accounting period(s) under section 432 of ITAA 1936?

    The active income test has the meaning given by section 432 of the ITAA 1936.

    The statutory accounting period has the meaning given by section 319 of the ITAA 1936.

    If your CFCs in listed countries have satisfied the active income test for their statutory accounting period(s) under section 432 of ITAA 1936 answer Yes at A item 21e.

    If your CFCs in listed countries have failed the active income test for their statutory accounting period(s) under section 432 of ITAA 1936 answer No at A item 21e.

    If some of your CFCs in listed countries have satisfied, and some of your CFC in listed countries have failed, the active income test for their statutory accounting period(s) under section 432 of ITAA 1936 answer Yes at A item 21e and No at A item 21e.

    If your CFCs in specified countries or jurisdictions have satisfied the active income test for their statutory accounting period(s) under section 432 of ITAA 1936 answer Yes at B item 21e.

    If your CFCs in specified countries or jurisdictions have failed the active income test for their statutory accounting period(s) under section 432 of ITAA 1936 answer No at B item 21e.

    If some of your CFCs in specified countries or jurisdictions have satisfied, and some of your CFC in specified countries or jurisdictions have failed, the active income test for their statutory accounting period(s) under section 432 of ITAA 1936 answer Yes at B item 21e and No at B item 21e.

    If your CFCs in other unlisted countries or jurisdictions have satisfied the active income test for their statutory accounting period(s) under section 432 of ITAA 1936 answer Yes at C item 21e.

    If your CFCs in other unlisted countries or jurisdictions have failed the active income test for their statutory accounting period(s) under section 432 of ITAA 1936 answer No at C item 21e.

    If some of your CFCs in other unlisted countries or jurisdictions have satisfied, and some of your CFC in other unlisted countries or jurisdictions have failed, the active income test for their statutory accounting period(s) under section 432 of ITAA 1936 answer Yes at C item 21e and No at C item 21e.

    To help work out whether your CFCs have passed or failed the relevant tests, see:

    Last modified: 06 Nov 2018QC 55230