• 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 (see 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)

    $______________

    = C $____________

    Amount at label A (gross turnover)

    $______________

      Last modified: 04 Jun 2015QC 44160