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Modifications for an unlisted country

Last updated 4 December 2006

The notional assessable income of a CFC includes only amounts that fall into specified categories. All other amounts are treated as notional exempt income.

The excluded amounts depend on whether the CFC passed or failed the active income test.

What if a CFC fails the active income test?

If a CFC fails the active income test, amounts that would be assessable if the CFC were a resident are included in attributable income to the extent they represent the following:

  • adjusted tainted income derived by the CFC directly
  • adjusted tainted income derived by the CFC indirectly as a partner in a partnership
  • trust amounts arising directly
  • trust amounts arising indirectly because the CFC is a partner in a partnership, or
  • FIF income derived by the CFC directly or indirectly as a partner in a partnership.

What if a CFC passes the active income test?

If a CFC passes the active income test, amounts that would be assessable if the CFC were a resident are included in attributable income to the extent they represent the following:

  • FIF income derived by the CFC directly or indirectly as a partner in a partnership
  • trust amounts arising to the CFC directly, or
  • trust amounts arising to the CFC indirectly because the CFC is a partner in a partnership.

These amounts are explained in sections 5 and 6. Any other income is notional exempt income.

Diagram 1: Amounts taken into account – unlisted country CFC

Trust (including transferor trust) income derived directly or indirectly via a partnership are always included; tainted income derived directly or indirectly via a partnership is only included if the CFC fails the active income test; other income is not included.

QC18000