Foreign income return form guide

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Appendices

Appendix 1: Foreign income regulations

Introduction

Part 8A of the Income Tax Assessment (1936 Act) Regulation 2015 , and associated schedules, deal with the taxation of foreign source income. The provisions:

  • declare those countries that are to be treated as listed, unlisted countries
  • contain rules for determining whether an amount is designated concession income
  • specify when the capital gains are taken to have been subject to tax for the purpose of the controlled foreign company (CFC) measures, the transferor trust measures, and the non-assessable non-exempt treatment of foreign branches of Australian companies
  • set out the accruals taxation laws of other countries that are recognised for the purpose of providing relief from double accruals taxation, and
  • provide that Swiss cantonal taxes are treated as if they were federal taxes.

Listed countries

Regulation 19 of the Income Tax Assessment (1936 Act) Regulation 2015 specifies the countries that are listed countries. This list is reproduced in attachment A .

Designated concession income

Normally, amounts derived in a listed country are exempt from accruals taxation. This exemption does not apply to amounts of eligible designated concession income. Broadly, an amount may be designated concession income if it is concessionally taxed in a listed country.

What kinds of income or profits are specified as designated concession income?

Income or profits are designated concession income only if:

  • they are of a kind specified in the Income Tax Assessment (1936 Act) Regulation 2015 in relation to a particular listed country, and
  • they are derived by an entity that is of a type specified in the Income Tx Regulations 1936 .

The full list of designated concession income has been reproduced in attachment B .

Capital gains deemed subject to tax

Capital gains are defined (except for the purposes of regulation 20 of the Income Tax Assessment (1936 Act) Regulation 2015 ) as gains or profits of a capital nature that arise from the sale or disposal of all or part of a capital gains tax (CGT) asset, other than gains or profits that would not be capital gains but for a provision of Australian tax law.

Regulation 20 provides that a capital gain (defined as gains or profits or other amounts of a capital nature) will be taken to be subject to tax in a listed country where the gain would have been subject to tax except for the operation of a rollover relief provision of a kind specified in the Income Tax Assessment (1936 Act) Regulation 2015 contained in the tax law of that country. Broadly, the types of rollover relief reflect the types of rollover relief provisions available for capital gains tax purposes under Australian tax law.

Attachment A

Listed countries

  • Canada
  • France
  • Germany
  • Japan
  • New Zealand
  • United Kingdom
  • United States of America

Attachment B

Items of designated concession income

CountryEntityKind of income or profitFeature of income or profit under tax law of the country
CanadaAn entity that operates in Canada as an international banking centre under Canadian lawAll passive income and tainted services incomeNot subject to tax in Canada in a tax accounting period
CanadaA company that operates in Canada as an investment corporation, or as a mutual fund corporation, under Canadian tax lawAll passive incomeNot taxed in Canada at the normal company tax rate
FranceA company that operates in France as a soci é t é d'investissement à capital variable (SICAV) under French lawAll passive incomeNot subject to tax in France in a tax accounting period
FranceA company that is treated as a resident of France for the purposes of the tax law of France, and that has elected to be taxed on a tonnage basis rather than on income or profitsAll income or profitsNot used as the basis for establishing the amount of taxable income, taxable profits, tax base or tax liability of the entity under the tax law of France
GermanyA company that is treated as a resident of Germany for the purposes of the tax law of GermanyAll passive income in carrying on business outside Germany at or through a permanent establishmentNot subject to tax in Germany in a tax accounting period
GermanyEither:

(a) a company that is treated as a resident of Germany for the purposes of the tax law of Germany, or

(b) any company in carrying on business in Germany at or through a permanent establishment of the company in Germany

Capital gains in respect of shares in companiesNot taxed in Germany at the normal company tax rate
GermanyA company that is treated as a resident of Germany for the purposes of the tax law of Germany, and that has elected to be taxed on a tonnage basis rather than on income or profitsAll income or profitsNot used as the basis for establishing the amount of taxable income, taxable profits, tax base or tax liability of the entity under the tax law of Germany
JapanAn entity in carrying on business in Japan at or through a permanent establishment of the entity in that countryAll income or profits derived from Japanese governmental bondsNot subject to tax in Japan in a tax accounting period
New ZealandEither:

(a) a company that is treated as a resident of New Zealand for the purposes of the tax law of New Zealand, or

(b) any entity in carrying on business in New Zealand at or through a permanent establishment of the entity in New Zealand

Capital gains in respect of tainted assetsNot subject to tax in New Zealand in a tax accounting period
United KingdomA company that is treated as a resident of the United Kingdom for the purposes of the tax law of the United KingdomCapital gains in respect of shares in companies where:

(a) the CGT assets of the companies, or

(b) the underlying CGT assets of the companies held through one of more non-resident entities that are associates

include CGT assets having the necessary connection with Australia

Not subject to tax in the United Kingdom in a tax accounting period as a consequence of the substantial shareholding exemption available under the tax law of the United Kingdom
United KingdomA company that is treated as a resident of the United Kingdom for the purposes of the tax law of the United Kingdom, and that has elected to be taxed on a tonnage basis rather than on income or profitsAll income or profitsNot used as the basis for establishing the amount of taxable income, taxable profits, tax base or tax liability of the entity under the tax law of the United Kingdom
United KingdomAn entity that operates in the United Kingdom as an open-ended investment company under the law of the United KingdomAll passive incomeNot taxed in the United Kingdom at the normal company tax rate
United States of AmericaEither:

(a) a company that is treated as a resident of the United States of America for the purposes of the tax law of the United States, or

(b) any entity in carrying on business in the United States of America at or through a permanent establishment of the entity in that country

All income or profits derived from tax-exempt governmental bondsNot subject to tax in the United States of America in a tax accounting period
United States of AmericaAn entity that operates in the United States of America as a regulated investment company under the tax law of the United StatesAll passive incomeNot taxed in the United States of America at the normal company tax rate

Appendix 2: Accruals taxation on the change of residence of a controlled foreign company (CFC) from an unlisted country to a listed country or to Australia

The attributable taxpayers in relation to a CFC are taxed under section 457 on the amount that relates to the period until the change of residence. Non-portfolio dividends received by the CFC during the period are not included.

Change of residence of a CFC from an unlisted country to Australia

If a CFC changes residence from an unlisted country to Australia, a resident taxpayer who is an attributable taxpayer of the CFC is taxable on the taxpayer's attribution percentage of the adjusted distributable profits of the CFC. The amount of the distributable profits that is taxable to a resident taxpayer includes the adjusted tainted income of the CFC (excluding non-portfolio dividends) less any expenses relating to that adjusted tainted income.

Example 1

  • AustCo owns 75% of CFC 1, a CFC that is resident in an unlisted country. CFC 1 becomes a resident of Australia on 30 September. CFC 1 has a statutory accounting period of 1 July-30 June. For the period 1 July-30 September, CFC 1 earned the following amounts of income:

Portfolio dividends  $10,000
Non-portfolio dividends  $15,000
Tainted interest income$12,000
Tainted services income$23,000
Total$60,000
  • CFC 1's adjusted tainted income is $45,000. It incurs expenses of $5,000 in earning the adjusted tainted income.
  • CFC 1's adjusted distributable profits are $40,000.
  • As a result, the amount attributable to AustCo under section 457 is 75% x $40,000 = $30,000.

Change of residence of a CFC from an unlisted country to a listed country

If a CFC changes residence from an unlisted country to a listed country, a resident attributable taxpayer has to include in assessable income a share of the adjusted distributable profits of the CFC.

The amount to be included is worked out in the same way as the amount that arises where an unlisted country CFC becomes a resident of Australia. However, a further adjustment is made to the CFC's distributable profits; the CFC is treated as having disposed of all of its tainted assets for their market value at the time it changed residence. Accordingly, the distributable profits also include a net profit arising on the deemed disposal of those assets.

Example 2

  • AustCo owns 75% of CFC 2, a CFC that is resident in an unlisted country. CFC 2 becomes a resident of a listed country on 30 September. CFC 2 has a statutory accounting period of 1 July-30 June. For the period 1 July-30 September, CFC 2 earned the following amounts of income:

Portfolio dividends  $10,000
Non-portfolio dividends  $15,000
Tainted interest income$12,000
Tainted services income$23,000
Total$60,000
  • CFC 2's adjusted tainted income is $45,000. It incurs expenses of $5,000 in earning the adjusted tainted income. The net profit (deemed) arising on CFC 2's tainted assets at 30 September is $100,000.
  • CFC 2's adjusted distributable profits are $140,000.
  • As a result, the amount attributable to AustCo under section 457 is 75% x $140,000 = $105,000.

Treatment of residence changes arising from changes to the lists of countries

If an unlisted country CFC is treated as having changed residence to a listed country as a result of the unlisted country becoming listed, section 457 will not apply to this type of change in residence.

Appendix 3: Summaries and worksheets

Overview

This appendix contains the following summary sheets that may be useful when preparing your tax return.

Summary sheet 1 attributed income
Summary sheet 2 working out your share of the attributable income of a CFC
Summary sheet 3 active income test
Summary sheet 4 transferor trust and related measures

It also contains the following worksheets:

  • Worksheet 1 Working out your control and attribution percentages
  • Worksheet 2 Working out the tainted income ratio for a CFC
  • Worksheet 3 Working out amounts from partnerships to be included in the tainted income ratio
  • Worksheet 4 Working out the attributable income of a CFC.

The summaries and worksheets are intended as guides only and may not cover all the qualifications and conditions contained in the law that may apply to a particular case.

Summary sheet 1: Attributed income

This summary sheet will enable you to total the amounts of attributed income to be included in your tax return. Prepare a separate sheet if you need more space for any part.

Part A Attributable income from CFCs

Include your share of:

  • the attributable income of each CFC in which you have an attribution interest
  • attributable amounts arising where an unlisted country CFC changes residence to a listed country or to Australia.

Summary sheet for attributable income

Name of the CFCAmount of attributable income
1 $
2 $
3 $
4 $
5 $
Total$

See summary sheet 2 to work out whether you have to include attributable income from a CFC.

Part B Income attributed to you from a non-resident trust under the transferor trust measures

Summary sheet for attributable income

Name of the trustAmount of attributable income
1 $
2 $
3 $
4 $
5 $
Total$

See summary sheet 4 to work out whether you have to include attributable income from a trust under the transferor trust measures.

Part C Your share of the net income of any partnership or trust that consists of income attributed to the partnership or trust under the accruals tax measures, whether from a CFC or a non-resident trust estate

Summary sheet for attributable income

Name of partnership or trustAmount of attributable income
1 $
2 $
3 $
4 $
5 $
Total$

Part D Total of the amounts in parts A, B and C

Part A$
Part B$
Part C$
Total$

Include this total amount in your tax return at the appropriate labels as set out in Individual tax return instructions or the instructions for your tax return.

Summary sheet 2: Working out your share of the attributable income of a CFC

Use this summary sheet if you had an interest in a foreign company during your income year. Use a separate summary sheet for each foreign company.

Your name
Tax file number
Name of foreign company
  1. Were you a Part X Australian resident at the end of the CFC's statutory accounting period?

YesGo to question 2 .
NoYou do not have to work out the foreign company's attributable income for the income year.
  1. Was the foreign company a CFC at the end of its statutory accounting period?
  • To work out if the foregin company is a CFC at the end of its statuory accounting period, answer questions 1 to 10 of worksheet 1 . Treat references to the test time in worksheet 1 as references to the end of the CFC's statutory accounting period.

YesGo to question 3.
NoYou do not have to work out the foreign company's attributable income for the income year.
  1. Were you an attributable taxpayer at the end of the CFC's statutory accounting period?
  • To work out if you were an attributable taxpayer answer questions 11 and 12 of worksheet 1 .
  • Treat references to the test time in worksheet 1 as references to the end of the CFC's statutory accounting period.

YesWork out the CFC's attributable income. Read on.
NoYou do not have to work out the CFC's attributable income for the income year.
  1. Was the CFC resident in a listed country or in an unlisted country at the end of the statutory accounting period?

Listed country: state the name of the country or countries of residence.
Unlisted country: state the name of the country or countries of residence.
  1. Did the CFC pass or fail the active income test?
  • To work out whether the CFC passed the active income test, use summary sheet 3 and the associated worksheets.

_____Pass _____Fail
  1. What was the CFC's attributable income?
  • Complete worksheet 4 to answer this question.

Write the amount from A of worksheet 4 here:$_____
  1. What was your share of the CFC's attributable income?
  • Complete worksheet 4 to answer this question.

Write the amount from B of worksheet 4 here:$______

Summary sheet 3: Active income test

Use this summary sheet to determine whether a CFC passes the active income test.

  1. Was the CFC resident in a particular listed country or unlisted country at all times during the CFC's statutory accounting period?

YesGo to question 2 .
NoThe CFC has failed the active income test.

Tick Fail at question 5 of summary sheet 2 .
  1. Did the CFC, or a partnership in which the CFC was a partner, have a permanent establishment in the CFC's country of residence at all times during the period?

YesGo to question 3 .
NoThe CFC has failed the active income test.

Tick Fail at question 5 of summary sheet 2 .
  1. Has the CFC, and every partnership in which it was a partner, kept accounts according to commercially accepted accounting principles which give a true and fair view of its financial position?

YesGo to question 4 .
NoThe CFC has failed the active income test.

Tick Fail at question 5 of summary sheet 2 .
  1. Has the CFC complied with the substantiation requirements in chapter 4?

YesGo to question 5.
NoThe CFC has failed the active income test.

Tick Fail at question 5 of summary sheet 2 .
  1. Is the tainted income ratio less than 0.05?

YesThe CFC passes the income test.

Tick Pass at question 5 on summary sheet 2 .
NoThe CFC has failed the active income test.

Tick Fail at question 5 of summary sheet 2 .

To work out the CFC's tainted income ration, use worksheet 2 .

Summary sheet 4: Transferor trust and related measures

The following summary sheet will help you to work out:

  • whether a transfer or deemed transfer of property or services you have made to a non-resident trust estate is subject to the transferor trust measures, and
  • whether you may be liable to pay additional tax in the form of an interest charge on distributions from a non-resident trust estate.
  1. Have you, at any time, transferred any property or services to a non-resident trust estate?

YesGo to questions 2 .
NoGo to question 13 .

Individuals, partnerships, trust estates, companies and superannuation funds also need to answer this question at the appropriate items on their tax returns.

  1. Have you, at any time, transferred any property or services to a non-resident trust estate that is a discretionary trust estate?

YesGo to question 4 .
NoGo to question 3 .
  1. Have you, after 7.30pm on 12 April 1989, transferred any property or services to a non-resident trust estate that is a non-discretionary trust estate for less than an arm's-length amount?

YesGo to question 4.
NoGo to question 13 .
  1. Have you made one or more transfers to a non-resident trust estate which is a public unit trust?

YesIf none of the transfers to that public unit trust are subject to the transferor trust measures (see chapter 2 ), you are not an attributable taxpayer in relation to the public unit trust. Go to question 5 .

If one or more of the transfers to the public unit trust is subject to the measures, you are an attributable taxpayer in relation to the public unit trust. Go to both questions 5 and 10 .

NoGo to question 5 .
  1. Have you made one or more transfers to a non-resident trust estate under directions contained in a deceased person's will or codicil, or a court order which varies the will or codicil?

YesIf none of the exceptions applies to any one of the transfers (see chapter 2 ), you are not an attributable taxpayer in relation to the trust estate. Go to question 6 .

If one of the exceptions applies to any one of the transfers, you are an attributable taxpayer in relation to the trust estate. Go to both question 6 and question 10 .

NoGo to question 6.
  1. Have you made one or more transfers to a non-resident trust estate that is a non-resident family trust?

YesIf, at all times during your income year, the trust estate:
  • has been a non-resident family trust, you are not an attributable taxpayer in relation to the trust estate. Go to question 7 .
  • has not been a non-resident family trust, you are an attributable taxpayer in relation to the trust estate. Go to both questions 7 and 10 .
NoGo to question 7.
  1. Before migrating to Australia for the first time (provided you migrated after 12 April 1989) did you make a transfer to a non-resident trust estate before migrating?

YesIf you were not in a position to control the trust estate between:
  • the commencement of the first income year after you became a resident, and
  • the end of your current income year

you are not an attributable taxpayer in relation to the trust estate. Go to question 8 .

If you were in a position to control the trust estate between the two dates mentioned above, you are an attributable taxpayer in relation to the trust estate. Go to both question 8 and question10 .

NoGo to question 8.
  1. Did you make one or more transfers to any other non-resident trust estate that is a discretionary trust estate?

YesIf none of the transfers to that discretionary trust estate are subject to the transferor trust measures, you are not an attributable taxpayer in relation to that trust estate. Go to question 9.

If one or more of the transfers to that trust estate is subject to the measures, you are an attributable taxpayer in relation to that trust estate. Go to both question 9 and question 10 .

NoGo to question 9 and question 10.
  1. Did you make one or more transfers to any other non-resident trust estate that is a non-discretionary trust estate?

YesIf none of the transfers to the non-discretionary trust estate are subject to the transferor trust measures, you are not an attributable taxpayer in relation to that non-discretionary trust estate.

Go to question 10 if you are an attributable taxpayer in relation to another non-resident trust estate. If not, go to question 13 .

If one or more of the transfers to that trust estate is subject to the measures, you are an attributable taxpayer in relation to that non-discretionary trust estate. Go to question 10.

NoIf you are an attributable taxpayer in relation to another non-resident trust estate, go to question 10 . If not, go to question 13 .

If one or more of the transfers to that trust estate is subject to the measures, you are an attributable taxpayer in relation to that non-discretionary trust estate. Go to question 10 .

  1. Do you have, or are you able to obtain, the necessary information to work out the net income of the non-resident trust estate?

YesWork out the amount of attributable income of the trust estate based on the net income calculation, then go to question 11 .
NoWork out the amount of attributable income using the deemed rate of return approach. Include this amount in summary sheet 1. Then go to question 13 .
  1. Is the non-resident trust estate a listed country trust estate?

YesWork out the total attributable income of all trust estates for which you are an attributable taxpayer.

If that amount is equal to or less than the lesser of:

  • $20,000, or
  • 10% of the total of the net incomes of each of those trust estates of the year of income in which you have an interest
  • then include in your assessable income only the attributable income of any unlisted country trust estates. Go to question 12 .
NoGo to question 12 .
  1. Have you worked out an amount of attributable income of a non-resident trust estate other than that excluded by question 11?

YesInclude the amounts in summary sheet 1 . Then go to question 13 .
NoGo to question 13 .
  1. Have you received a distribution from a non-resident trust estate during your income year?

YesWork out the amount of the distribution to include in your assessable income. Then go to question 14 .
NoYou have finished this summary sheet.

Individuals, partnerships, trust estates, companies and superannuation funds also need to answer the following question at the appropriate items on their tax returns.

  1. Have you included an amount in your assessable income for a trust distribution from a non-resident trust estate during your income year?

YesWork out the amount, if any, of the interest charge for the distribution to include on your tax return: see part 2 of chapter 2 .
NoYou have finished this summary sheet.

Worksheet 1: Working out your control and attribution percentages

Answer the following questions to determine:

  • if a foreign company is a CFC
  • if you are an attributable taxpayer in relation to a CFC
  • your attribution percentage.

In the questions that follow, the test time is the end of the statutory accounting period of the foreign company that falls within your income year, or the time at which a dividend was paid by a foreign company. Fill out a separate worksheet for each test time.

  1. Have you or your associates held, or had an entitlement to acquire, any interest in a foreign company during the income year? The interest may be held directly or through other entities.

YesGo to question 2 .
NoThe CFC measures do not apply.
  1. Did you or your associates have an interest in the foreign company at the test time? The interest may be held directly or through other entities.

YesGo to question 3 .
NoThe CFC measures do not apply.
  1. What was your direct control interest in the foreign company at the test time?

To work this out, take the highest of the following interests that you held, or were entitled to acquire, in the foreign company at the test time:

  • percentage of the total paid-up capital of the company %
  • highest percentage of the total rights to vote, or participate in any decision making, concerning any of the following:
    • making distributions of capital or profits _____%
    • changing the constituent document _____%
    • varying the share capital _____%
  • percentage of the total rights to distributions of capital of the company on winding up _____%
  • percentage of the total rights to distributions of profits of the company on winding up _____%
  • percentage of the total rights to distributions of capital of the company other than on winding up _____%
  • percentage of the total rights to distributions of profits of the company other than on winding up _____%

Enter the highest percentage of the above interests at a:

  • a _____%
  1. At the test time, did any of your associates hold, or have an entitlement to acquire, a direct interest in the foreign company?

YesWork out the interest and enter it at b: _____%
NoGo to question 5.
  1. At the test time, did you hold, or have an entitlement to acquire, an indirect control interest in the foreign company through another controlled foreign company, controlled foreign partnership or controlled foreign trust?

YesWork out the interest and enter it at c: _____%

Do not include interests taken into account in question 4 .

NoGo to question 6 .
  1. At the test time, did any of your associates hold, or have an entitlement to acquire, an indirect interest in the foreign company?

YesWork out the total of those interests and enter it at d: _____%

Do not include interests taken into account in questions 3, 4 or 5 .

NoGo to question 7.
  1. At the test time, did you have an associate-inclusive control interest of 1% or more in the foreign company?

To answer this, add the following amounts:

  • your direct interest in the foreign company (from a question 3)
    • a _____%
  • your associates' direct interest in the foreign company (from b question 4)
    • b _____%
  • your indirect interests in the foreign company (from c question 5)
    • c _____%
  • your associates' indirect interests in the foreign company

    (from d question 6).
    • d _____%

Total of (a + b + c + d) = _____%

This is your associate-inclusive control interest in the CFC.

If your answer is less than 1%, the CFC measures do not apply.

If it is 1% or more, go to question 8 .

  1. At the test time, did five or fewer Australian entities, each with an associate-inclusive control interest of 1% or more, have a total associate inclusive control interest of 50% or more in the foreign company?

YesThe foreign company is a CFC. Go to question 11 .
NoGo to question 9 .
  1. At the test time, was there a single Australian entity whose associate-inclusive control interest in the company was at least 40%? Your answer is NO if the foreign company was controlled by an unassociated party or parties.

YesThe foreign company is a CFC at the test time. Go to question 11 .
NoGo to question 10 .
  1. Is the foreign company in fact controlled by a group of five or fewer Australian entities, alone or with associates?

YesThe foreign company is a CFC at the test time. Go to question 11 .
NoThe CFC measures do not apply.
  1. A t the test time, did you have an associate-inclusive control interest of at least 10% in the CFC?

YesYou are an attributable taxpayer. You must work out the attributable income of the CFC at the test time. Go to question 13 .
NoGo to question 12 .
  1. If the CFC is controlled by a group of five or fewer Australian entities, either alone or with associates, are you an Australian 1% entity who is one of those five entities?

YesYou are an attributable taxpayer. Go to question 13 .
NoThe CFC measures do not apply.
  1. W hat is your direct attribution interest in the CFC?

This is the same percentage as the direct control interest.

Write the answer from a at question 3 here.

_____%
Go to question 14 . 
  1. What is the total of your indirect attribution interests in the CFC?

Do not include the interests of your associates._____%
Go to question 15 . 
  1. Add the answers to questions 13 and 14

This is your attribution percentage in the CFC at the test time.  _____%

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

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 revenueAmount $
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:(b)

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

CategoryAmount $
Revenue from commodity contracts 
Revenue from exchange gains 
Revenue from other asset disposals 
Total(c)

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

CategoryAmount $
Net commodity gain 
Net exchange gain 
Net gain from other asset disposals 
Total(d)

Step 5

Work out the CFC's share of the gross turnover of partnerships in which the CFC is a partner (see worksheet 3 ).

Name of partnershipAmount $
  
  
  
Total(e)

Gross turnover (a - b - c + d + e) = $________ (A)

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.

Category of passive incomeAmount $
Tainted interest income 
Annuities 
Tainted royalty income 
Tainted rental income 
Dividends 
Other passive income 
Total:(a)

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). $________ (b)

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). $________ (b)

Step 4

Work out the part of the CFC's net gains included in gross turnover that are tainted income.

Step 4 worksheet

CategoryAmount $
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:(d)

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 partnershipAmount $
  
  
  
Total:(e)

Gross tainted turnover (a + b + c + d + e) = $ ________ (B)

Part C The tainted income ratio

The tainted income ratio is as follows:

Amount at B (gross tainted turnover) / Amount at A (gross turnover) = $ _______ (C)

Worksheet 3: Working out amounts from partnerships to include in the tainted income ratio

Use a separate worksheet for each partnership. All amounts are to be in the currency in which the accounts of the partnership are kept. Do not convert to Australian dollars.

Part A - Working out the partnership's gross turnover

Step 1

Work out the partnership's gross revenue as shown in the partnership's accounts.

  • $_______ (a)

Step 2

Work out the following amounts included in a .

Do not include these amounts in the ratio.

Step 2 Worksheet

Category of gross revenueAmount $
Amounts already assessed to the CFC in Australia   
Amounts derived through a branch in a listed country that is not EDCI in relation to any listed country and are subject to tax in a listed country 
Non-portfolio dividends from a foreign company 
Dividends out of profits previously attributed   
Franked dividends 


Trust amounts
 
Total:(b)

Step 3

Work out the following gross amounts included in (a).

Do not count amounts already excluded under step 2. The net amounts are added back at ste p 4.

Step 3 worksheet

Category of gross revenueAmount $
Revenue from commodity contracts   
Revenue from exchange gains   
Revenue from other asset disposals   
Total(c)

Step 4

Work out net gains included in gross turnover.

Do not count amounts that fall into the categories in step 2.

Step 4 worksheet

Category of net gainAmount $
Net commodity gain 


Net exchange gain
 
Net gain from other asset disposals 
Total(d)

Gross turnover of the partnership (a - b - c + d) = $________(A)

Part B Working out the partnership's gross tainted turnover

Step 1

Work out the partnership's gross revenue that is passive income after exclusions (item a from part A less items b and c from part A) that falls into the following categories of passive income:

Category of passive income

Amount $
Tainted interest income 
Annuities   
Tainted royalty income   
Tainted rental income   
Dividends   
Other passive income   
Total:(a)

Step 2

Work out the partnership's gross revenue that is tainted sales income after exclusions (item a from part A less items b and c from part A). $________ (b)

Step 3

Work out the partnership's gross revenue that is tainted services income after exclusions (item a from part A less items b and c from part A). $________ (b)

Step 4

Work out the partnership's net gains included in gross turnover that are tainted income.

Step 4 worksheet

CategoryAmount $
Net commodity gain (from part A)   
Net tainted commodity gain   
Smaller amount  
Net exchange gain (from part A)   
Net tainted exchange gain   
Smaller amount  
Net gain from assets (from part A)   
Net gain from tainted assets   
Smaller amount 
Total smaller amounts:(d)

Gross tainted turnover of the partnership (a + b + c + d) = $________ (B)

Part C CFC's share of the gross turnover and the gross tainted turnover

CFC's percentage interest in the net income of the partnership:

  1. _____%

CFC's share of the gross turnover of the partnership:

Percentage interest in net income from above × ( A from part A) = $_____ (C)

Use this amount to fill in step 5 of part A of worksheet 2

CFC's share of the gross tainted turnover of the partnership:

Percentage interest in net income from above × ( B from part B) = $_____ (D)

Use this amount to fill in step 5 of part B of worksheet 2

Worksheet 4: Working out the attributable income of a CFC

Use this worksheet to work out the attributable income of a CFC and the amount to include in your assessable income.

Part A: Working out attributable income under Division 7 of Part X of the ITAA 1936

Step 1

Summary of the notional assessable income of the CFC.

Category of notional assessable incomeAmount $
Net capital gain under Parts 3-1 and 3-3 of ITAA 1997 
Other notional assessable income 
Total(a)

Step 2

Summary of the notional allowable deductions of the CFC

AmountSubtotal
General notional allowable deductions 
Sometimes exempt income (SEXI) loss 
Converted CFC loss (subject to certain limitations) 
Total:(b)

Converted CFC loss is the notional allowable deduction for previously unutilised losses which exist at the commencement of the statutory accounting period starting on or after 1 July 2008 and that have been converted in accordance with the transitional foreign loss rules for CFCs. A convertible CFC loss will be treated as a loss only for the purpose of applying Part X of ITAA 1936 to statutory accounting periods beginning on or after 1 July 2008.

Step 3

Attributable income of the CFC before any reduction for interim dividends paid (item a less item b ) = c

Step 4

Interim dividends paid by the CFC (from the amount at item c) = d

Attributable income of the CFC ( c - d ): $_____ (A)

Part B: Working out your share of attributable income

Step 1

Insert your attribution percentage in the CFC at the end of the CFC's statutory period (as previously worked out in worksheet 1 ).

Step 2

Work out your assessable income (multiply the amount at item A part A by the attribution percentage).

Step 3

Insert the reduction amount you can claim if the CFC has income or gains which were accruals-taxed in a foreign country.

Step 4

Take the amount in step 3 part B away from the amount in step 2 part B.

$________ (B)

How self-assessment affects you

Self-assessment means we use the information you give on your tax return and any related schedules and forms to work out your refund or tax liability. We do not take any responsibility for checking the accuracy of the details you provide, although our system automatically checks the arithmetic.

Although we do not check the accuracy of your tax return at the time of processing, at a later date we may examine the details more thoroughly by reviewing specific parts, or by conducting an audit of your tax affairs. We also have a number of audit programs that are designed to continually check for missing, inaccurate or incomplete information.

What are your responsibilities?

It is your responsibility to lodge a tax return that is signed, complete and correct. Even if someone else, including a tax agent, helps you to prepare your tax return and any related schedules, you are still legally responsible for the accuracy of your information.

What if you lodge an incorrect tax return?

If you become aware that your tax return is incorrect, you must contact us straight away.

Initiatives to complement self-assessment

There are a number of systems and entitlements that complement self-assessment, including:

  • the private ruling system (see below)
  • the amendment system (if you find you have left something out of your tax return)
  • your entitlement to interest on early payment or over-payment of a tax debt.

Do you need to ask for a private ruling?

If you are uncertain about how a tax law applies to your personal tax affairs, you can ask for a private ruling. To do this, complete:

or contact us.

Lodge your tax return by the due date, even if you are waiting for the response to your application. You may need to request an amendment to your tax return once you have received the private ruling.

We publish all private rulings on our website. Private rulings are published in an edited form to safeguard taxpayer privacy.


Copyright

Commonwealth of Australia

This work is copyright. You may download, display, print and reproduce this material in unaltered form only (retaining this notice) for your personal, non-commercial use or use within your organisation. Apart from any use as permitted under the Copyright Act 1968 , all other rights are reserved.

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ATO references:
NO 51231-2

Foreign income return form guide
  Date: Version:
  1 July 2010 Original document
  1 July 2011 Updated document
  1 July 2012 Updated document
  1 July 2013 Updated document
  1 July 2014 Updated document
  1 July 2015 Updated document
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