Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 770 - Foreign income tax offsets  

Subdivision 770-C - Rules about payment of foreign income tax  

Rules about when foreign tax is paid

SECTION 770-135   Foreign income tax paid by CFCs on attributed amounts  

770-135(1)  


This Division applies to an entity (other than a *CFC) as if it had paid an amount of *foreign income tax worked out under subsection (7) in respect of an amount included in its assessable income if:


(a) the amount is included in its assessable income as described in subsection (2); and


(b) the conditions in subsections (3) and (5) are satisfied.

770-135(2)  


An amount is included in an entity ' s assessable income as described in this subsection if the entity is a company and the amount is included under:


(a) section 456 (a section 456 case ) of the 1936 Act in relation to a * CFC and a statutory accounting period; or


(b) section 457 (a section 457 case ) of that Act in relation to a CFC.

Note:

Section 456 of the 1936 Act includes, in the assessable income of certain Australian shareholders, amounts that are attributable to the profits of an Australian controlled foreign company.

Section 457 does likewise when a controlled foreign company changes residence from an unlisted to a listed country or to Australia.

Tax paid condition

770-135(3)  
An amount of *foreign income tax, income tax or *withholding tax (the tax amount ) must have been paid:


(a) for a section 456 case - by the *CFC in respect of an amount included in the notional assessable income of the CFC for the statutory accounting period; or


(b) for a section 457 case - by the CFC.


(c) (Repealed by No 114 of 2010)

Note:

Section 770-130 deems foreign income tax to have been paid in certain circumstances.

770-135(4)  
For the purposes of paragraphs (3)(a) and (b), the tax amount includes an amount that is taken to have been paid by the *CFC under subsection 393(4) of the 1936 Act (about tax paid on reinsurance premiums). Association condition

770-135(5)  
If the entity is a company, it must have an *attribution percentage of 10% or more:


(a) for a section 456 case - in relation to the *CFC at the end of the statutory accounting period; or


(b) for a section 457 case - in relation to the CFC at the residence-change time (within the meaning of section 457 of the 1936 Act).


(c) (Repealed by No 114 of 2010)

770-135(6)  
(Repealed by No 114 of 2010)

Amount of foreign income tax

770-135(7)  


The amount worked out under this subsection is:


(a) for a section 456 case - the sum of all the tax amounts for the statutory accounting period multiplied by the company ' s * attribution percentage in relation to the * CFC at the time mentioned in paragraph (5)(a); or


(b) for a section 457 case - the sum of all the tax amounts to the extent they are attributable to the amount included in the company ' s assessable income under section 457 of the 1936 Act.

Grossing-up of attributed amount

770-135(8)  


For the purposes of this Act except this section and section 371 of the 1936 Act (for a section 456 case or a section 457 case), the amount included in the entity ' s assessable income as described in subsection (2) is taken to be increased by the amount of tax worked out under subsection (7).
Note:

Section 371 of the 1936 Act records an amount in an attribution account when the amount is included in the assessable income of an attributable taxpayer in relation to a CFC.


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