Taxation (Multinational - Global and Domestic Minimum Tax) Rules 2024

CHAPTER 4 - COMPUTATION OF ADJUSTED COVERED TAXES  

PART 4-1 - ADJUSTED COVERED TAXES  

Division 2 - Qualified flow-through ownership interests  

SECTION 4-37   EXCLUDED EQUITY GAIN OR LOSS - QUALIFIED FLOW-THROUGH OWNERSHIP INTERESTS - GENERAL CASE  

4-37(1)    
This section applies if:

(a)    an election under subsection 3-31(1) for an MNE Group applies to a jurisdiction and a Fiscal Year; and

(b)    a Constituent Entity of the MNE Group located in the jurisdiction has a qualified flow-through ownership interest for the Fiscal Year; and

(c)    the Constituent Entity is not mentioned in subsection 4-39(1) .

4-37(2)    
If the Constituent Entity ' s adjusted investment amount in respect of the qualified flow-through ownership interest exceeds zero for the Fiscal Year, add to the Constituent Entity ' s Adjusted Covered Taxes for the Fiscal Year the lesser of the following:

(a)    that excess;

(b)    the sum of the amounts covered by subsection (3) for the Fiscal Year.

4-37(3)    
This subsection covers each of the following:

(a)    the amount of any tax credit, other than a Qualified Refundable Tax Credit, with respect to the qualified flow-through ownership interest;

(b)    the amount of any tax-deductible loss with respect to the qualified flow-through ownership interest, multiplied by the applicable domestic tax rate;

to the extent that the amount is treated, for financial accounting purposes, as reducing the Constituent Entity ' s tax expense for the Fiscal Year.

4-37(4)    
If the Constituent Entity ' s adjusted investment amount in respect of the qualified flow-through ownership interest for the Fiscal Year is exceeded by the sum of the amounts covered by subsection (5) for the Fiscal Year, subtract the excess from the Constituent Entity ' s Adjusted Covered Taxes for the Fiscal Year, subject to subsection (6) .

4-37(5)    
This subsection covers each of the following:

(a)    the amount of any tax credit in respect of the qualified flow-through ownership interest;

(b)    the amount of any tax-deductible loss in respect of the qualified flow-through ownership interest, multiplied by the applicable domestic tax rate;

(c)    the amount of any distribution (including a return of capital) in respect of the qualified flow-through ownership interest;

(d)    the amount of the proceeds of sale of all or a part of the qualified flow-through ownership interest.

4-37(6)    
A subtraction may only be made under subsection (4) in respect of the following amounts for the Fiscal Year to the extent of any addition to the Constituent Entity ' s Adjusted Covered Taxes under subsection (2) :

(a)    an amount mentioned in paragraph (5)(a) that is a Qualified Refundable Tax Credit;

(b)    an amount mentioned in paragraph (5)(c) or (d) .