• Advice under development – international issues

    We are developing advice and guidance on the following international issues.

    [3708] Forex realisation event 4

    Title
    Draft Taxation Determination
    Income tax: does forex realisation event 4 happen to the debtor under subsection 775-55(1) of the Income Tax Assessment Act 1997 on repayment of a loan taken out prior to the effective date of a choice to use the applicable functional currency and denominated in the same non-Australian dollar currency that later becomes the applicable functional currency?

    Registered
    11 February 2015

    Purpose
    To clarify whether FRE 4 happens on repayment of a loan obligation incurred prior to the effective date of an applicable functional currency choice and denominated in the same non-Australian dollar currency that later becomes the applicable functional currency.

    Expected completion
    To be advised

    [3735] Foreign hybrid limited partnership

    Title
    Final Taxation Determination
    Income tax: can a foreign resident elect to treat their interest in a limited partnership as an interest in a foreign hybrid limited partnership under paragraph 830-10(2)(b) of the Income Tax Assessment Act 1997?

    Registered
    5 January 2016

    Purpose
    To clarify whether a foreign resident investing in Australia through a foreign limited partnership can make an election under paragraph 830-10(2)(b) of the ITAA 1997.

    Expected completion
    13 December 2017

    Comments
    TD 2016/D2 published on 10 August 2016

    [3759] Direct control interests – partnerships

    Title
    Final Taxation Determination
    Income tax: where an Australian corporate tax entity is a partner in a partnership, can the partnership 'hold' a direct control interest (within the meaning of section 350 of the Income Tax Assessment Act 1936) in a foreign company for the purpose of Subdivision 768-A of the Income Tax Assessment Act 1997?

    Registered
    20 May 2016

    Purpose
    To confirm that an Australian corporate tax entity that holds its interest in a foreign company via a partnership can have a control interest in a foreign company for the purpose of satisfying the participation test in section 768-15 of the ITAA 1997.

    Expected completion
    27 September 2017

    Comments
    TD 2016/D6 published on 7 December 2016. The publication of the final TD is delayed due to ongoing internal review processes.

    See also finalised consultation matter [201498].

    [3760] Direct control interests – trusts

    Title
    Final Taxation Determination
    Income tax: where an Australian corporate tax entity is a beneficiary of a trust, can the trust be taken to 'hold' a direct control interest (within the meaning of section 350 of the Income Tax Assessment Act 1936) in a foreign company for the purpose of Subdivision 768-A of the Income Tax Assessment Act 1997?

    Registered
    20 May 2016

    Purpose
    To confirm that an Australian corporate tax entity that holds its interest in the foreign company via a trust can have a control interest in a foreign company for the purpose of satisfying the participation test in section 768-15 of the ITAA 1997.

    Expected completion
    27 September 2017

    Comments
    TD 2016/D7 published on 7 December 2016. The document is in the final stages of internal review.
    See also finalised consultation matter [201498].

    [3765] Transfer pricing rules and debt/equity tests

    Title
    Draft Taxation Determination
    Income tax: how do transfer pricing rules in Subdivision 815-B of the Income Tax Assessment Act 1997 and the debt-equity tests in Division 974 interact in working out an entity’s taxable income or loss for an income year?

    Registered
    15 July 2016

    Purpose
    To provide the Commissioner’s view on whether Subdivision 815-B prevails over Division 974 when both apply to an entity in an income year.

    Expected completion
    13 December 2017

    Comments
    The draft is currently undergoing internal review.

    [3766] Transfer pricing benefit from an outbound/inbound interest free loan

    Title
    Draft Taxation Determination
    Income tax: how are the actual conditions and arm’s length conditions identified for interest free loans under Subdivision 815-B of the Income Tax Assessment Act 1997?

    Registered
    15 July 2016

    Purpose
    To provide the Commissioner’s view on whether interest free loans will be considered to be an equity contribution when identifying the actual and arm’s length conditions.

    Expected completion
    13 December 2017

    Comments
    The draft is currently undergoing internal review.

    [3821] Thin capitalisation: attribution of ADI equity capital and Controlled Foreign Entity equity

    Title
    Draft Practical Compliance Guideline
    Thin capitalisation: attribution of ADI equity capital and Controlled Foreign Entity equity.

    Registered
    November 2014

    Purpose
    To outline an approach in determining the amount of ADI equity capital and controlled foreign equity attributed by outbound investing entities.

    Expected completion
    31 October 2017

    Comments
    The draft is in the final stages of internal review.
    See also finalised consultation matter [201495].

    [3838] Corporate residency – central management and control in Australia

    Title
    Final Taxation Ruling
    Income tax: Foreign Incorporated Companies: central management and control test of residency

    Registered
    16 November 2016

    Purpose
    To provide the ATO’s view on ‘central management and control in Australia’ for the purposes of paragraph (b) of the definition of ‘resident’ or ‘resident of Australia’ in subsection 6(1) of the Income Tax Assessment Act 1936.

    Expected completion
    November 2017

    Comments
    TR 2017/D2 published on 15 March 2017.
    See also finalised consultation matter [201709]

    The final Taxation Ruling will replace TR 2004/15 following the High Court decision in Bywater Investments Limited & Ors v. Commissioner of Taxation; Hua Wang Bank Berhad v. Commissioner of Taxation [2016] HCA 45, 2016 ATC 20-589.

    We are considering comments and issues raised during consultation which will be taken into account in developing the Ruling.

    Title
    Draft Practical Compliance Guidelines
    Income tax: central management and control test of residency: identifying where a company's central management and control is located

    Registered
    22 June 2017

    Purpose
    To provide practical guidance in support of TR 2017/D2 on the ATO's view on ‘central management and control in Australia’ for the purposes of paragraph (b) of the definition of ‘resident’ or ‘resident of Australia’ in subsection 6(1) of the Income Tax Assessment Act 1936.

    Expected completion
    November 2017

    Comments
    The draft Practical Compliance Guideline will provide complementary practical guidance to the ATO's view in TR 2017/D2, following the High Court decision in Bywater Investments Limited & Ors v. Commissioner of Taxation; Hua Wang Bank Berhad v. Commissioner of Taxation [2016] HCA 45, 2016 ATC 20-589.

    We are conducting a targeted consultation on the practical guidance and considering comments and feedback which will be taken into account in developing the draft Practical Compliance Guideline.

    [3847] Cross-border related party financing arrangements and related transactions

    Title
    Final Practical Compliance Guideline
    ATO compliance approach to taxation issues associated with cross-border related party financing arrangements and related transactions

    Registered
    February 2017

    Purpose
    To set out the ATO compliance approach in respect of the taxation outcomes associated with a ‘financing arrangement’ (as defined in section 995-1 of the ITAA 1997’, or a related transaction or contract, entered into with a cross border related party.

    Expected completion
    27 October 2017

    Comment
    PCG 2017/D4 published on 16 May 2016.
    We are currently revising the document in light of comments received.
    See also finalised consultation matter [201746]

    Last modified: 15 Sep 2017QC 50317