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(c) (Repealed by No 114 of 2010)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(c) (Repealed by No 114 of 2010)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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