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

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:

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:

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:

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:

Gross turnover (a – b – c + d + e)

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:

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).

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).

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:

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:

Gross tainted turnover (a + b + c + d + e)

The tainted income ratio is as follows:

Amount at label B

(gross tainted turnover)

___________

Amount at label A

(gross turnover)

___________

=

C                __________