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

Last updated 25 May 2016

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:

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 (see worksheet 3).

Name of partnership

Amount $

______________________________

$______________

______________________________

$______________

______________________________

$______________

Total:

Gross turnover (a – b – c + d + e)

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:

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)

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)

$______________

QC48087