Section 3 - Is the CFC's income generally exempt from accruals taxation?
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A number of exemptions from accruals taxation are provided for amounts taxed in a comparable tax country listed in the Income Tax Regulations 1936.
Countries listed for accruals taxation purposes are called listed countries. These countries are listed in part 1 of attachment A in appendix 1. Countries not listed for accruals taxation purposes are called unlisted countries (a subset of unlisted countries is 'section 404 countries'.
Summary of the terms used to refer to countries
Listed countries are those listed in Schedule 10 of the Income Tax Regulations 1936. Amounts taxed at full rates by listed countries are generally exempt from accruals taxation. The list of listed countries is in attachment A of appendix 1.
Section 404 countries
Section 404 countries are those listed as 'section 404 countries' in Schedule 10 of the Income Tax Regulations 1936. The list of section 404 countries is in attachment A of appendix 1.
Section 404 excludes from attributable income dividends paid from a company resident in a listed country or section 404 country to a CFC that is also resident in a listed or section 404 country.
Unlisted countries are those that are not listed countries. This includes section 404 countries for all purposes of the CFC rules except the application of section 404.
Last modified: 05 Dec 2006QC 18000