Show download pdf controls
  • Question 22

    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 question assesses the risk of assessable foreign income for CFCs and CFTs not being correctly accounted for under the relevant tax legislation.

    The dollar amounts or values asked for in this question are all based on your tax records.

    Section 456 of the ITAA 1936 includes attributable income of a CFC in the assessable income of an Australian resident taxpayer that is an attributable taxpayer.

    Section 457 of the ITAA 1936 includes in the assessable income of a resident taxpayer, who is an attributable taxpayer in relation to a CFC, certain amounts in respect of a change of residence of the CFC from an unlisted country or jurisdiction to a listed country or to Australia.

    Section 459A of the ITAA 1936 includes amounts in a taxpayer's assessable income where the taxpayer is an attributable taxpayer for a CFC or CFT, and the amount of net income of an Australian partnership or trust includes attributable income which accrues to the benefit of the CFC or CFT, and is not otherwise taxed in Australia.

    To complete this question, if you have an amount of foreign income that is assessable under sections 456, 457 or 459A of the ITAA 1936, write the total amount assessable under each of the sections at the corresponding labels.

    To complete labels A, B and C, you must identify the residency of each CFC or CFT for which you included attributable income in assessable income under section 456 of the ITAA 1936 for the income year. Work out the attributable income amounts referrable to those entities in each of the following location categories:

    • listed country
    • specified country or jurisdiction
    • other unlisted country or jurisdiction.

    At A, write the total amount of attributable income included in your assessable income under section 456 for the income year for CFCs and CFTs of listed countries.

    At B, write the total amount of attributable income included in your assessable income under section 456 for the income year for CFCs and CFTs of specified countries or jurisdictions.

    At C, write the total amount of attributable income included in your assessable income under section 456 for the income year for CFCs and CFTs of other unlisted countries or jurisdictions. Include any attributable income included in your assessable income under section 456 of the ITAA 1936 for the income year that you have not already included at A and B.

    At D, write the total of the amounts written at A, B and C.

    You must complete E if your assessable income for the income year included an amount assessable under section 457 of the ITAA 1936. At E, write the total amount included in your assessable income under section 457 of the ITAA 1936 for the income year.

    Label F

    You must complete F if your assessable income for the income year included an amount assessable under section 459A of the ITAA 1936. At F, write the total amount included in your assessable income under section 459A of the ITAA 1936 for the income year.

    For more information about working out if these provisions apply to you, including an overview of calculations, see the Foreign income return form guide 2018.

    For companies conducting banking or insurance activities (AFI or Australian financial institutions), there are special rules that apply. These rules are not discussed in the guide. See Subdivision F of Division 8 of Part X of the ITAA 1936.

    To help work out the amounts to include, see:

    Example

    An Australian resident shareholder (attributable taxpayer) includes section 456 attributable income in its assessable income from CFCs and CFTs which are resident in countries set out in the following table.

    CFC or CFT country of residence

    Section 456 attributable income amount

    Canada

    $1,010,000

    Niue

    $501,000

    Panama

    $629,000

    Italy

    $459,000

    Total

    $2,599,000

    As Canada is a listed country, the section 456 amount written at A is $1,010,000.

    As Niue and Panama are specified countries or jurisdictions, the section 456 amount written at B is:

    Specified countries or jurisdictions

    Section 456 attributable income amount

    Niue

    $501,000

    Panama

    $629,000

    Total written at B

    $1,130,000

    As Italy is an 'other unlisted country or jurisdiction', the section 456 amount written at C is $459,000.

    The total amount of section 456 attributable income written at D is $2,599,000.

    This image shows an example of how to complete Question 22.

    End of example
    Last modified: 06 Nov 2018QC 55230