• Overseas transactions

    29 Overseas transactions

    Was the aggregate amount of your transactions or dealings with international related parties (including the value of any property/service transferred or the balance of any loans) greater than $2 million?

    No Print X in the No box at W.

    Yes Print X in the Yes box at W.

    Did the thin capitalisation provisions apply? (See appendix 3 for more information.)

    Print X in the appropriate box at O.

    If you answered yes at labels 29W or 29O, complete and attach an International dealings schedule 2016 to the tax return. Print X in the Yes box at Have you attached any 'other attachments'? at the top of page 1 of the tax return.

    However, if the partnership was a subsidiary member of a consolidated group or MEC group for the entire income year, you do not need to complete a return or International dealings schedule 2016.

    Where the partnership is a member of a consolidated group or MEC group for the whole income year and derived foreign income, the responsibility for preparing the schedule will rest on the head company of the group.

    Where a return is required because the partnership had a period in the income year when it was not a member of a consolidated group or MEC group (a non-membership period) the partnership should complete an International dealings schedule 2016 where it has derived foreign income attributable to any non-membership period.

    The aggregate amount of the partnership’s transactions or dealings is the total amount of all dealings, whether on revenue or capital account (including property transfers or service provision) and includes the balance of any loans or borrowings outstanding with international related parties. Transactions must not be netted off against each other, for example, a $600,000 purchase from, and a $700,000 sale to, related parties should be treated as totalling $1,300,000, not $100,000.

    International related parties may be persons who are not dealing wholly independently with one another in their cross-border commercial or financial relations and whose dealings or relations can be subject to Subdivision 815-B of the ITAA 1997 or the associated enterprises article of a relevant double tax agreement (DTA). The term includes:

    • any overseas entity or person who participates directly or indirectly in the management, control or capital of the partnership
    • any overseas entity or person in respect of which the partnership participated directly or indirectly in the management, control or capital
    • any overseas entity or person in respect of which persons who participate directly or indirectly in its management, control or capital are the same persons who participate directly or indirectly in the management, control or capital of the partnership.

    Participates includes a right of participation, the exercise of which is contingent on an agreed event occurring.

    Person includes a company.

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

    The type of dealings or transactions which will require the partnership to complete the International dealings schedule 2016 are dealings with:

    • international related parties as above, such as an overseas holding company, overseas subsidiary, overseas branch or non-resident trust in which the entity has an interest
    • unrelated parties where the conditions that operate between you and the unrelated party are different to the conditions that might be expected to operate between independent parties dealing wholly independently with one another in comparable circumstances.

    These dealings or transactions may be the provision or receipt of goods or 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. They may include the transfer of tangible or intangible property, provision or receipt of services, 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 to be taken as an international transaction.

    Overseas expenses

    Interest expenses overseas

    Show at D the amount of interest paid to non-residents. Include this amount at I item 5.

    If you include an amount at D, you must complete an International dealings schedule 2016.

    An amount of tax (withholding tax) is generally withheld from:

    • interest paid (or payable) to non-residents, and
    • from interest derived by a resident through an overseas branch.

    You must remit these amounts to us. You cannot claim a deduction unless you have remitted any withholding tax to the Commissioner of Taxation. If you have withheld amounts from payments to non-residents, you may need to lodge a PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report (NAT 7187) by 31 October 2016. For more information, phone 13 28 66.

    Royalty expenses overseas

    Show at E the royalty expenses paid to non-residents during the income year.

    If you include an amount at E, complete an International dealings schedule 2016.

    Include this amount at J item 5, plus or minus any reconciliation adjustment for royalty expenses that you included at B Expense reconciliation adjustments item 5.

    An amount of tax (withholding tax) is generally withheld from royalties:

    • paid or payable to non-residents and
    • derived by a resident through an overseas branch.

    You must remit this amount to us. You cannot claim a deduction unless you have remitted any withholding tax to the Commissioner. If you have withheld amounts from payments to non-residents, you may need to lodge a PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report (NAT 7187) by 31 October 2016. For more information, phone 13 28 66.

    Record keeping

    Keep a record of the following:

    • names and addresses of recipients
    • amounts paid
    • nature of the benefit derived, for example, a copy of the royalty agreement
    • details of tax withheld where applicable, and the date on which it was remitted to us.

    Transactions with specified countries

    Did you send any funds or property to, or receive any funds or property from, any of the countries listed below? This includes sending or receiving funds or property indirectly, for example, through another entity or country.

    Do you have the ability to control the disposition of any funds, property, investments, or any other assets located in any of the countries listed below? This includes:

    • funds or assets that may be located elsewhere, but are controlled or managed from one of the countries listed below, and
    • where you have an expectation you are able to control the disposition of the funds or assets, or you have the capacity to control the disposition indirectly, for example, through associates.

    Print X in the Yes box for yes, or X in the No box for no at C.

    The specified countries are as follows:

    Andorra

    Liechtenstein

    Anguilla

    Luxembourg

    Antigua and Barbuda

    Marshall Islands

    Aruba

    Mauritius

    Bahamas

    Monaco

    Bahrain

    Montserrat

    Belize

    Nauru

    Bermuda

    Netherlands

    British Virgin Islands

    Niue

    Cayman Islands

    Panama

    Cook Islands

    Saint Martin (Dutch part)

    Curacao

    Samoa

    Cyprus

    San Marino

    Dominica

    Seychelles

    Gibraltar

    Singapore

    Grenada

    St Kitts & Nevis

    Guernsey

    St Lucia

    Hong Kong

    St Vincent & the Grenadines

    Ireland

    Switzerland

    Isle of Man

    Turks & Caicos Islands

    Jersey

    US Virgin Islands

    Labuan (in Malaysia)

    Vanuatu

    Liberia

     

    Last modified: 10 Aug 2016QC 48217