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

    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

    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.

       

    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.

     

    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.

     

    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 (refer to worksheet 3).

     

    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.

     

    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.

     

    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.

     

    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 label B

    (gross tainted turnover)

    ___________

       

    Amount at label A

    (gross turnover)

    ___________

    =

    C                __________

      Last modified: 28 Jun 2012QC 25628