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

    Attention

    Warning:

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

    End of attention

    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.

    Step 2 worksheet

    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.

    Step 3 worksheet

    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

    Step 4 worksheet

    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).

    Step 5 worksheet

    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.

    Step 1 worksheet

    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.

    Step 4 worksheet

    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.

    Step 5 worksheet

    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: 31 Jul 2017QC 51231