• Conditions to be met before you work out attributable income

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    You only need to work out attributable income if a foreign company is a CFC at the end of the foreign company's statutory accounting period. In addition, you will only need to work it out if you are an attributable taxpayer at the end of the period.

    If you have an interest in a CFC at the end of the CFC's statutory accounting period, you must work out the attributable income of the CFC for the entire period, not just for the time you held the interest.

    Example 12

    Disposal of a CFC before the end of a statutory accounting period

    A resident individual with an income year ending 30 June has a CFC with a statutory accounting period that coincides with the individual's income year. On 31 December 2002 the individual disposes of the CFC to an unassociated resident company.

    In this case, the resident individual will not be an attributable taxpayer for the CFC's statutory accounting period ending 30 June 2003. Consequently, the resident individual will not include in their assessable income any of the attributable income of the CFC for the period.

    Example 13

    Acquisition of a CFC part way through a statutory accounting period

    Taking the facts from the previous example, the resident company would be an attributable taxpayer for the CFC's statutory accounting period ending 30 June 2003. The company would therefore be taxed on the attributable income of the CFC for the entire period even though the company owned the foreign company for only the second half of that period.

    Note that, where there is an arrangement that is designed to avoid the CFC measures by selling an interest before the end of a CFC's statutory accounting period and acquiring the interest after the end of the period, you will be treated as if the interest were not sold.

    Were you an attributable taxpayer at the end of the CFC's statutory accounting period?

    No

    You do not need to work out attributable income. You do not need to continue reading this guide.

    Yes

    Read on.

    Last modified: 05 Dec 2006QC 18000