Taxation Laws Amendment Act (No. 4) 2003 (66 of 2003)

Schedule 3   Non-assessable non-exempt income

Income Tax Assessment Act 1936

40   Section 160AFCJ

Repeal the section, substitute:

160AFCJ Foreign tax in respect of amounts that are non-assessable non-exempt income under section 23AK

(1) If a FIF attribution account payment made to a resident taxpayer by a FIF attribution account entity in a year of income is, in whole or in part (the section 23AK non-assessable part ), not assessable income and not exempt income under section 23AK, these provisions have effect.

(2) The section 23AK non-assessable part is taken, for the purposes of paragraph 160AF(1)(a) but not (d), to be included in the taxpayer's assessable income of the year of income.

(3) The taxpayer is taken for the purposes of this Division to have paid, and to have been personally liable for, in respect of the section 23AK non-assessable part, in the year of income, an amount of foreign tax worked out using the formula:

(EP * DT) + (AEP * UT) - AT

(4) In this section:

AEP or adjusted exempt percentage means the percentage that would be the exempt percentage if the FIF attribution account payment were reduced by any part of that payment that is non-assessable non-exempt income under section 23AJ.

AT or attributed tax means the amount of any FIF attributed tax account debit arising for the FIF attribution account entity in relation to the taxpayer on the making of the FIF attribution account payment, to the extent that the amount of the debit does not exceed the multiple of the adjusted exempt percentage and the underlying tax.

DT or direct tax means any foreign tax that, disregarding this section and section 160AFC, the taxpayer is taken for the purposes of this Division to have paid, and to have been personally liable for, in respect of the FIF attribution account payment.

EP or exempt percentage means the percentage of the FIF attribution account payment represented by the section 23AK non-assessable part.

UT or underlying tax means any foreign tax that, disregarding this section, the taxpayer is taken, for the purposes of this Division, to have paid, and to have been personally liable for, under subparagraph 6AB(3)(a)(ii) or under section 160AFC in respect of the FIF attribution account payment.