Items 24 to 28 – Overseas transactions or interests/thin capitalisation

These items must be answered even if you do not have any overseas transactions or interests.

Agents for non-residents

If a tax return that includes income or deductions from only the activities listed in table 8 is lodged in accordance with the following sections of the ITAA 1936 and does not include income or deductions from any other source, print X in the No box at X item 24, Y item 25 and Z item 26. Do not complete an International dealings schedule 2016.

Table 8: Activities carried out by agents for non-residents

Industry type	Industry code	Section number
Overseas shipping	99020	129
Agents for non-resident insurer	99050	144
Agents for non-resident reinsurers	99050	148
Control of non-resident’s money	99070	255

Dividends as the only international transactions

If dividends were paid to or received from a related overseas entity and those dividends were the only transactions with related overseas entities, print X in the No boxes at X item 24 and Y item 25 for overseas transactions and do not complete an International dealings schedule 2016. Answer items 26, 27, and 28 as required.

International dealings schedule

If you need to lodge an International dealings schedule 2016, see the International dealings schedule instructions 2016.

International related party dealings/transfer pricing

24 Did you have any transactions or dealings with international related parties (irrespective of whether they were on revenue or capital account)?

Print X in the appropriate box at X item 24.

International related parties are persons who are not dealing wholly independently with one another in their international commercial or financial relations. The term includes:

• any overseas entity or person who participates directly or indirectly in the company’s management, control or capital
• any overseas entity or person in which the company participates directly or indirectly in the management, control or capital
• any overseas entity or person in which persons who participate directly or indirectly in its management, control or capital are the same persons who participate directly or indirectly in the company’s management, control or capital.

Participates includes a right of participation, the exercise of which is contingent on an agreed event occurring. Person has the same meaning as in subsection 6(1) of the ITAA 1936 and section 995-1 of the ITAA 1997.

For more information as to the relevant degree of participation, see Taxation Ruling IT 2514 – Income tax: Company Schedule 25A: Information return for companies that transact business with related overseas entities.

The type of ‘dealings or transactions’ that will require the entity to answer yes at this question are dealings by the entity with related parties (as mentioned above), such as an overseas holding company, overseas subsidiary, or a non-resident trust in which the entity has an interest. These dealings or transactions may be the provision or receipt of services, or transactions in which money or property has been sent out of Australia, or received in Australia from an overseas source during the income year. The dealings may also include transfer of tangible or intangible property, or the provision or receipt of loans or financial services.

If money or property is not actually sent out of Australia or received in Australia but accounting entries are made that have the effect of money or property being transferred, this is also taken to be an international transaction.

25. Was the aggregate amount of the transactions or dealings with international related parties (including the value of property transferred or the balance outstanding on any loans) greater than $2 million?

Print X in the appropriate box at Y item 25.

The aggregate amount of the dealings with international related parties is the total amount of all dealings, whether on revenue or capital account, and includes the balance of any loans or borrowings outstanding at the end of the income year.

Transactions must not be netted off against each other. Hence, a $600,000 purchase from and a $700,000 sale to a related party should be treated as totaling $1,300,000 not $100,000.

If the answer is yes, complete the International dealings schedule 2016.

Overseas interests

26 Did you have overseas branch operations or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transferor trust?

Print X in the appropriate box at Z item 26.

Overseas branch operations include:

• business operations carried on by an Australian resident entity at or through a fixed place of business in another country
• business operations carried on by a foreign resident entity at or through a fixed place of business in Australia.  

You must answer yes if the company derived a dividend or other amount that is treated as non-assessable non-exempt income under section 23AH, 23AI, , 23AK, 99B(2A) of the ITAA 1936 or sub-division 768-A in the ITAA 1997.

If the answer is yes, complete the International dealings schedule 2016.

The ‘interests’ in item 26 that will require the entity to complete the schedule are those where:

• the entity has an interest in a controlled foreign company (CFC) or trust (CFT)
• the entity has transferred property, at any time, including money or services, to a non-resident trust, or is able to influence the decisions relating to a non-resident trust, or
• the entity held a direct voting percentage of 10% or more in a foreign company and it had a CGT event happening to a share in the foreign company.

An interest in a CFC or CFT may be either direct or indirect, and has the same meaning as set out in Division 3 of Part X of the ITAA 1936. For the purposes of the CFC rules, do not trace interests through an Australian entity. For example, if your company has an interest in an Australian trust which owns a CFC, your company is not regarded as having a direct or indirect interest in the CFC, although your company must still include any attributable income to which it was presently entitled as its assessable income.

A company has an interest in a transferor trust if the company has ever made, or caused to be made, a transfer of property or services to a non-resident trust. ‘Transfer’, ‘property’ and ‘services’ are defined in section 102AAB of the ITAA 1936. Sections 102AAJ and 102AAK of the ITAA 1936 provide guidance on whether there has been a transfer or deemed transfer of property or services to a non-resident trust.

Thin capitalisation

27 Did the thin capitalisation provisions affect you?

Print X in the appropriate box at O item 27. If the answer is yes, complete and attach an International dealings schedule 2016.

For information on whether the thin capitalisation provisions affect you, see appendix 3.

Transactions with specified countries

28 Did you directly or indirectly send to, or receive from, one of the countries specified in the instructions, any funds or property, OR

Do you have the ability or expectation, to control, whether directly or indirectly, the disposition of any funds, property, assets or investments located in, or located elsewhere but controlled or managed from one of those countries?

Print X in the appropriate box at I item 28.

The specified countries are in table 9.

Table 9: Specified countries

Countries
Andorra
Anguilla
Antigua and Barbuda
Aruba
Bahamas
Bahrain
Belize
Bermuda
British Virgin Islands
Cayman Islands
Cook Islands
Curacao
Cyprus
Dominica
Gibraltar
Grenada
Guernsey
Hong Kong
Ireland
Isle of Man
Jersey
Labuan
Liberia
Liechtenstein
Luxembourg
Marshall Islands
Mauritius
Monaco
Montserrat
Nauru
Netherlands
Niue
Panama
Saint Martin (Dutch part)
Samoa
San Marino
Seychelles
Singapore
St Kitts and Nevis
St Lucia
St Vincent and the Grenadines
Switzerland
Turks and Caicos Islands
US Virgin Islands
Vanuatu