Change of residence of a controlled foreign company from an unlisted country to a listed country
The attributable taxpayers in relation to a controlled foreign company are taxed under section 457 of the ITAA 1936 on the amount that relates to the period until the change of residence.
If a controlled foreign company changes residence from an unlisted country to a listed country, a resident attributable taxpayer has to include in its assessable income a share of the adjusted distributable profits of the controlled foreign company.
The amount to be included is worked out in the same way as the amount that arises where a controlled foreign company from an unlisted country becomes a resident of Australia. However, a further adjustment is made to the controlled foreign company's distributable profits. The controlled foreign company is treated as having disposed of all of its tainted assets for their market value at the time it changed residence. Accordingly, the distributable profits also include a net profit arising on the deemed disposal of those assets.
Example of change of residence to a listed country