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Section 2 - General modifications to the law

Last updated 4 December 2006

This section explains a number of general modifications to the taxation law which apply when working out the attributable income of a CFC. There are also modifications to:

  • the treatment of gains and losses made by a CFC on the disposal of a capital asset
  • the treatment of losses incurred by a CFC, including the quarantining of deductions
  • the treatment of amounts derived through a partnership.

These modifications are dealt with in section 3, section 4 and section 5 of part 3.

Elections to be made by the taxpayer

You can make most elections on behalf of a CFC in working out its attributable income. You must make the elections when you lodge your tax return. The Tax Office may extend the time for making the elections.

Lodgment of elections

In the case of companies and superannuation funds, no notice of the election is to be sent to the Tax Office. Only give notice if a taxation officer requests you to do so.

Exceptions to the rule

An election for rollover relief under the capital gains tax provisions must normally be made by a CFC, although you can make the election for a wholly-owned CFC. The rules for making these elections are explained in section 3 of part 3.

Functional currency elections are also an exception to the general rule that allows you to make most elections when working out the attributable income of a CFC - see Choice to use functional currency.