INCOME TAX ASSESSMENT ACT 1936

PART X - ATTRIBUTION OF INCOME IN RESPECT OF CONTROLLED FOREIGN COMPANIES  

Division 9 - Attribution of attributable income and other amounts  

SECTION 457   ASSESSABILITY WHERE CFC CHANGES RESIDENCE FROM UNLISTED COUNTRY TO LISTED COUNTRY OR TO AUSTRALIA  

457(1)   [Assessable income]  

Where at any time (in this section called the residence-change time ) a company that:


(a) is a CFC; and


(b) has an attributable taxpayer;

ceases to be resident in an unlisted country and becomes:


(c) a resident of a listed country; or


(d) a Part X Australian resident;

then the attributable taxpayer's assessable income of the year of income in which the residence-change time occurs includes the amount calculated under subsection (2).

457(2)   [Calculation of amount]  

The amount is calculated using the formula:


Attribution percent × Adjusted distributable profits

where:

Attribution percent
means the attributable taxpayer's attribution percentage, at the residence-change time, in relation to the CFC.

Adjusted distributable profits
means:


(a) if paragraph (1)(c) applies - the amount that would be the CFC's distributable profits at the residence-change time if:


(i) the CFC's income were its adjusted tainted income (excluding any non-portfolio dividends) derived during the period beginning on the first day of the statutory accounting period in which the residence-change time occurred and ending immediately before the time at which the residence-change time occurs; and

(ii) the CFC's only other income were an amount that the CFC would have derived had it disposed of all of its tainted assets immediately before the residence-change time for a consideration equal to their market value; and

(iii) the CFC's only expenses were expenses related to income covered by subparagraphs (i) and (ii); or


(b) if paragraph (1)(d) applies - the amount that would be the CFC's distributable profits at the residence-change time if:


(i) the CFC's only income were its adjusted tainted income (excluding any non-portfolio dividends) derived during the period beginning on the first day of the statutory accounting period in which the residence-change time occurred and ending immediately before the time at which the residence-change time occurs; and

(ii) the CFC's only expenses were expenses related to income covered by subparagraph (i).

457(3)   [Change of status because of regulations]  

If:


(a) at the residence-change time, regulations made for the purposes of section 320 come into effect; and


(b) a result of those regulations coming into effect is that the company:


(i) ceases to be a resident of an unlisted country; and

(ii) becomes a resident of a listed country;
at the residence-change time;

then no amount is to be included in the attributable taxpayer's assessable income under subsection (1) in relation to that change of residence.


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