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

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

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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)	$______________

Last modified: 26 May 2016QC 48087