This question assesses the risk of notional assessable income and attribution income modifications for CFCs not being correctly accounted for under the relevant tax legislation.
The dollar amounts or values asked for in this question are all based on your tax records.
The 2017 IDS did not include items 23a and 23b (notional assessable income and notional allowable deductions for your CFCs). If you have notional assessable income or notional allowable deductions for your CFCs, we understand that you may not have accounting systems which automatically collected and aggregated all the information required to complete all parts of items 23a and 23b for the first year based on the outputs from your accounting system alone.
If this is the case, complete items 23a and 23b using your current systems and make a best effort to estimate figures where you do not have records of the actual data.
Keep a record of:
- your determination of the best estimate figures you provided at items 23a and 23b
- the data you used to make this estimate.
Question 23a Specify the amounts of notional assessable income
To complete question 23a, you must work out the notional assessable income amounts for your CFCs in each of the following location categories:
- listed country
- specified country or jurisdiction
- other unlisted country or jurisdiction.
At A, write the total amount of adjusted tainted income that is eligible designated concession income under section 385 of the ITAA 1936 for the income year for your CFCs of listed countries.
At B, write the total amount of adjusted tainted income not treated as derived from sources in listed countries under section 385 of the ITAA 1936 for the income year for your CFCs of listed countries.
At C, write the total amount of other notional assessable income under section 385 of the ITAA 1936 for the income year for your CFCs of listed countries. Include any notional assessable income under section 385 for the income year for CFCs of listed countries that you have not already included at A and B.
At D, write the total of the amounts written at A, B and C.
At E, write the total amount of adjusted tainted income under section 384 for the income year for your CFCs of specified countries or jurisdictions.
At F, write the total amount of other notional assessable income under section 384 for the income year for your CFCs of specified countries or jurisdictions. Include any notional assessable income under section 384 of the ITAA 1936 for the income year for CFCs of specified countries or jurisdictions that you have not already included at E.
At G, write the total of the amounts written at E and F.
At H, write the total amount of adjusted tainted income under section 384 for the income year for CFCs of other unlisted countries or jurisdictions.
At I, write the total amount of other notional assessable income under section 384 for the income year for CFCs of other unlisted countries or jurisdictions. Include any notional assessable income under section 384 of the ITAA 1936 for the income year for CFCs of other unlisted countries or jurisdictions that you have not already included at H.
At J, write the total of the amounts written at H and I.
At K, write the total of the amounts written at D, G and J.
To help work out the amounts to include, see:
- section 384 of the ITAA 1936
- section 385 of the ITAA 1936
- adjusted trained income under section 386 of the ITAA 1936
- adjusted tainted income that is eligible designated concession income under section 385 of the ITAA 1936, which types of eligible designated concession income are set out in Part 8, regulation 17 of the Income Tax Assessment (1936 Act) Regulation 2015
- notional assessable income under subsection 382(2) of the ITAA 1936
- other relevant provisions in Part X of the ITAA 1936.
Example
Listed countries |
Adjusted tainted income that is eligible designated concession income |
Adjusted tainted income not treated as derived from sources in listed countries |
Other notional assessable income |
|---|---|---|---|
UK |
$2,000,000 |
$0 |
$0 |
Japan |
$0 |
$0 |
$300,000 |
New Zealand |
$2,600,000 |
$1,800,000 |
$0 |
France |
$0 |
$0 |
$1,800,000 |
Total |
$4,600,000 |
$1,800,000 |
$2,100,000 |
A total notional assessable income amount of $8,500,000 is referrable to the CFCs in listed countries.
Specified countries or jurisdictions |
Adjusted tainted income |
Other notional assessable income |
|---|---|---|
Hong Kong |
$3,500,000 |
$1,600,000 |
Switzerland |
$2,000,000 |
$0 |
Singapore |
$1,600,000 |
$0 |
Total |
$7,100,000 |
$1,600,000 |
A total notional assessable income amount of $8,700,000 is referrable to the CFCs in specified countries or jurisdictions.
Other unlisted countries or jurisdictions |
Adjusted tainted income |
Other notional assessable income |
|---|---|---|
Denmark |
$1,700,000 |
$0 |
Portugal |
$1,200,000 |
$0 |
Total |
$2,900,000 |
$0 |
Total notional assessable income amount of $2,900,000 is referrable to the CFCs in other unlisted countries or jurisdictions.
The attributable taxpayer's total notional assessable income amount for all their CFCs is $20,100,000.
The Australian resident taxpayer (the attributable taxpayer) completes question 23a.
Question 23b Specify the amounts of attribution income modifications
To complete question 23b, you must work out amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for your CFCs in each of the following location categories:
- listed country
- specified country or jurisdiction
- other unlisted country or jurisdiction.
At A, write the total amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for the income year for CFCs of listed countries.
At B, write the total amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for the income year for CFCs of specified countries or jurisdictions.
At C, write the total amounts of notional allowable deductions from the notional assessable income of CFCs (in accordance with general modification rules to calculation of attributable income of CFC under Subdivision B of Division 7 of Part X of the ITAA 1936) for the income year for CFCs of other unlisted countries or jurisdictions.
At D, write the total of the amounts written at A, B and C.
To help work out the amounts to include, see for example:
- notional allowable deductions under subsection 382(2) of the ITAA 1936
- subdivision B of division 7 of Part X of the ITAA 1936
- section 393 of the ITAA 1936
- section 394 of the ITAA 1936
- section 399A of the ITAA 1936
- other relevant provisions in Part X of the ITAA 1936.
Example
An Australian resident taxpayer (attributable taxpayer) includes notional allowable deductions from the notional assessable income of CFCs in its calculation of attributable income of CFCs which are resident of countries set out in the following table.
CFC country of residence |
Total amounts of notional allowable deductions from the notional assessable income of CFCs |
|---|---|
Listed countries |
$600,000 |
Specified countries or jurisdictions |
$200,000 |
Other unlisted countries or jurisdictions |
- |
Total |
$800,000 |
The total amount of notional allowable deductions from the notional assessable income of the CFCs in calculating the attributable income of all the CFCs is $800,000.
The Australian resident taxpayer (the attributable taxpayer) completes question 23b.
Question 24
This question provides us with the amount of non-assessable non-exempt income being derived in different tax jurisdictions and helps identify the nature of that income.
The dollar amounts or values asked for in this question are all based on your tax records.
To complete this question, work out:
- the amount of the foreign income you derived that is non-assessable non-exempt under sections 23AH or 23AI of the ITAA 1936 or Subdivision 768-A of the ITAA 1997, and
- the amount of this income derived from entities resident in each of the following location categories
- listed country
- specified country or jurisdiction
- other unlisted country or jurisdiction.
If you had foreign branch operations or any direct or indirect interests in foreign companies or foreign trusts, answer Yes at A item 24 and complete the following. If you answer Yes, include the amounts of foreign non-assessable non-exempt income you derived under any of the following:
- section 23AH – foreign branch income of Australian companies; the amount of income reported under section 23AH should include the total of both income and capital gains that are non-assessable non-exempt under that section
- section 23AI – amounts paid out of attributed CFC income
- Subdivision 768-A – foreign equity distributions on minimum 10% participation interests in foreign companies.
If you have no non-assessable non-exempt income under one or more of the above sections, leave the corresponding labels blank.
At B item 24a, write the amount of your non-assessable non-exempt income under section 23AH from your listed country foreign branch operations.
At C item 24a, write the amount of your non-assessable non-exempt income under section 23AH from your specified country or jurisdiction foreign branch operations.
At D item 24a, write the amount of your non-assessable non-exempt income under section 23AH from your other unlisted country or jurisdiction foreign branch operations.
At E item 24b, write the amount of your non-deductible expenses incurred in earning or deriving your non-assessable non-exempt income under section 23AH.
At B item 24c, write the amount of your non-assessable non-exempt income under section 23AI in respect of your attributed income from your CFCs in listed countries.
At C item 24c, write the amount of your non-assessable non-exempt income under section 23AI in respect of your attributed income from your CFCs in specified countries or jurisdictions.
At D item 24c, write the amount of your non-assessable non-exempt income under section 23AI in respect of your attributed income from your CFCs in other unlisted countries or jurisdictions.
At B item 24e, write the amount of your non-assessable non-exempt income under Subdivision 768-A for foreign equity distributions on participation interests from companies in listed countries.
At C item 24e, write the amount of your non-assessable non-exempt income under Subdivision 768-A for foreign equity distributions on participation interests from companies in specified countries or jurisdictions.
At D item 24e, write the amount of your non-assessable non-exempt income under Subdivision 768-A for foreign equity distributions on participation interests from companies in other unlisted countries or jurisdictions.
For help with working out if these provisions apply to you, see sections 23AH or 23AI of the ITAA 1936 or Subdivision 768-A of the ITAA 1997
For the table of:
- specified countries or jurisdictions and codes, see Appendix 1
- listed countries and codes, see Appendix 3.
All foreign countries not listed in the tables of listed countries and specified countries or jurisdictions are included in the other unlisted country or jurisdiction category.
Example
Country |
Section 23AH amount |
Section 23AI amount |
Subdivision 768-A amount |
|---|---|---|---|
Branch in the United States |
$12,000,000 |
$0 |
$0 |
United States |
$0 |
$0 |
$100,000 |
Liechtenstein |
$0 |
$42,000 |
$0 |
Belgium |
$0 |
$630,000 |
$0 |
As the United States is a listed country and the income from the branch is non-assessable non-exempt under section 23AH and the other United States income is non-assessable non-exempt income under Subdivision 768-A, the entity writes $12,000,000 at B item 24a and $100,000 at B item 24e.
As Liechtenstein is a specified country or jurisdiction and the income is non-assessable non-exempt income under section 23AI, $42,000 is written at C item 24c.
As Belgium is not a listed country or a specified country or jurisdiction it is an other unlisted country or jurisdiction. Consequently, the non-assessable non-exempt income under section 23AI of $630,000 is written at D item 24c.
All other labels are left blank.
The Australian resident completes question 24.