Change of residence to a listed country, example

AustCo owns 75% of CFC1, a controlled foreign company that is resident in an unlisted country. CFC1 becomes a resident of a listed country on 30 September. CFC1 has a statutory accounting period of 1 July to 30 June. For the period 1 July to 30 September, CFC1 earned the following amounts of income:


Portfolio dividends



Non-portfolio dividends



Tainted interest income



Tainted services income




CFC1's adjusted tainted income is $45,000. It incurs expenses of $5,000 in earning the adjusted tainted income. The net profit (deemed) arising on CFC1's tainted assets at 30 September is $100,000.

CFC1's adjusted distributable profits are $140,000.

Therefore the amount attributable to AustCo under section 457 is 75% x $140,000 = $105,000.

    Last modified: 21 Feb 2012QC 25356