Income Tax Assessment Act 1936
View history note
Hide history noteThe object of this Part is to provide for certain amounts to be included in a taxpayer's assessable income (Division 9 ) in respect of:
(a) the attributable income of a CFC (section 456 ); and
(b) certain changes of residence by a CFC (section 457 ).
(c) (Repealed by No 96 of 2004)
To that end (and for other purposes of this Act) this Part contains rules relating to the following:
(a) interpretation (Division 1 );
(b) types of entities (Division 2 );
(c) control interests, attribution interests, attributable taxpayers and attribution percentages (Division 3 );
(d) attribution accounts (Division 4 );
(e) (Repealed by No 143 of 2007 )
(f) (Repealed by No 96 of 2004)
(g) the calculation of attributable income of a CFC (Division 7 );
(h) the active income test (Division 8 );
(j) post-attribution asset disposals (Division 10 );
(k) the keeping of records (Division 11 ).
In this Part, unless the contrary intention appears:
accounting period
, in relation to company, means an accounting period used by the company in the accounts by reference to which it distributes dividends.
accounting records
includes invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes, vouchers and other documents of prime entry and also includes such working papers and other documents as are necessary to explain the methods and calculations by which accounts are made up.
accounts
means ledgers, journals, profit and loss accounts and balance-sheets, and includes statements, reports and notes attached to, or intended to be read with, any of the foregoing.
accruals tax law
, in relation to a listed country, means a law of the listed country that is declared by regulations for the purposes of this definition to be an accruals tax law.
active income test
has the meaning given by section
432
.
adjusted tainted income
has the meaning given by section
386
.
AFI
or
Australian financial institution
means any of the following Australian entities:
(a) a body corporate that is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959 ;
(b) a person who carries on State banking within the meaning of paragraph 51(xiii) of the Constitution;
(c) a registered entity under the Financial Sector (Collection of Data) Act 2001 ;
(d) a life assurance company.
AFI subsidiary
or
Australian financial institution subsidiary
has the meaning given by section
326
.
aircraft
means a machine or apparatus that can derive support in the atmosphere from the reactions of the air or from buoyancy, but does not include an air-cushion vehicle.
associate
has the meaning given by section
318
.
associate-inclusive control interest
has the meaning given by section
349
.
attributable income
has the meaning given by Division
7
.
attributable taxpayer
, has the meaning given by section
361
.
attributed tax account credit
(Repealed by
No 143 of 2007
)
attributed tax account debit
(Repealed by
No 143 of 2007
)
attributed tax account surplus
(Repealed by
No 143 of 2007
)
attribution account entity
has the meaning given by section
363
.
attribution account payment
has the meaning given by section
365
.
attribution credit
has the meaning given by section
371
.
attribution debit
has the meaning given by section
372
.
attribution percentage
has the meaning given by section
362
.
attribution tracing interest
:
(a) in relation to a CFC - has the meaning given by section 358; and
(b) in relation to a CFP - has the meaning given by section 359 ; and
(c) in relation to a CFT - has the meaning given by section 360 .
Australian 1% entity
, in relation to a company or trust, means an Australian entity whose associate-inclusive control interest in the company or trust is at least 1%.
Australian entity
has the meaning given by section
336
.
Australian partnership
has the meaning given by section
337
.
Australian tax
means income tax or withholding tax.
Australian trust
has the meaninggiven by section
338
.
broad-exemption listed country
(Repealed by No 96 of 2004)
CFC
or
controlled foreign company
has the meaning given by section
340
.
CFE
or
controlled foreign entity
has the meaning given by section
339
.
CFP
or
controlled foreign partnership
has the meaning given by section
341
.
CFT
or
controlled foreign trust
has the meaning given by section
342
.
CGT roll-over provisions
means former section 160ZZF and Divisions 5A, 5B, 7A and 17 of former Part IIIA of this Act or Divisions
122
,
124
and
126
, and section
118-350
, of the
Income Tax Assessment Act 1997
.
commodity
means any thing that is capable of delivery under an agreement for its delivery, but does not include an instrument creating or evidencing a chose in action.
(a) either of the following contracts:
(i) a forward contract in respect of a commodity;
(ii) a futures contract in respect of a commodity; or
(b) a right or option in respect of such a contract.
company
does not include a company in the capacity of trustee.
company title interest
, in relation to land, means a right of occupancy of the land, or of a building or part of a building erected on the land, arising by virtue of the holding of shares, or by virtue of a contract to purchase shares, in a company that owns the land or building.
(a) in relation to a CFC - has the meaning given by section 353 ; or
(b) in relation to a CFP - has the meaning given by section 354 ; or
(c)in relation to a CFT - has the meaning given by section 355 .
currency exchange gain
, in relation to a company, in relation to a statutory accounting period, means a currency gain realised by the company in the statutory accounting period, to the extent to which it is attributable to currency exchange rate fluctuations.
currency exchange loss
, in relation to a company, in relation to a statutory accounting period, means a currency loss realised by the company in the statutory accounting period, to the extent to which it is attributable to currency exchange rate fluctuations.
de facto marriage
(Repealed by No 144 of 2008)
(a) a relationship between 2 persons (whether of the same sex or different sexes) that is registered under a law of a State or Territory prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; or
(b) a relationship between 2 persons (whether of the same sex or different sexes) who, although not legally married to each other, live with each other on a genuine domestic basis in a relationship as a couple.
(a) any of former sections 54 to 62 of Division 3 of Part III of this Act, any provision of former Divisions 10, 10AAA, 10AA, 10A, 10C and 10D of that Part; or
(b) any provision of Division 40 of the Income Tax Assessment Act 1997 (other than Subdivision 40-E ) or of Division 43 of that Act; or
(c) any provision of the former Division 42 of that Act (other than Subdivisions 42-L and 42-M), or the former Subdivisions 330-A, 330-C, 330-H and 387-G of that Act.
designated concession income
, in relation to a listed country, means:
(a) income or profits of a kind specified in the regulations if:
(i) foreign tax imposed by a tax law of the country is not payable in respect of the income or profits because of a particular feature; or
and the feature is of a kind specified in the regulations; or
(ii) foreign tax imposed by a tax law of the country is payable in respect of the income or profits but there is a feature in relation to that tax;
(b) capital gains that would be made because of CGT event J1, if the assumptions in paragraphs 383(a) to (c) applied.
Note 1:
CGT event J1 is about companies ceasing to be related after a roll-over.
Note 2:
Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.
direct attribution account interest
has the meaning given by section
366
.
direct attribution interest
has the meaning given by section
356
.
(a) in relation to a company - has the meaning given by section 350 ;
(b) in relation to a trust - has the meaning given by section 351 .
discretionary trust
means a trust where:
(a) both of the following conditions are satisfied:
(i) a person (who may include the trustee) is empowered (either unconditionally or on the fulfilment of a condition) to exercise any power of appointment or other discretion;
(ii) the exercise of the power or discretion, or the failure to exercise the power or discretion, has the effect of determining, to any extent, either or both of the following:
(A) the identities of those who may benefit under the trust;
(B) how beneficiaries are to benefit, as between themselves, under the trust; or
(b) one or more of the beneficiaries under the trust have a contingent or defeasible interest in some or all of the corpus or income of the trust; or
(c) the trustee of another trust, being a trust where both of the conditions in paragraph (a) are satisfied, benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the first-mentioned trust.
disposal
of an asset includes:
(a) redemption; and
(b) CGT event J1 happening in relation to the asset (about companies ceasing to be related after a roll-over) if the assumptions in paragraphs 383(a) to (c) applied.
Note:
Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.
distributable profits
, in relation to a company, means the amount, whether of an income or capital nature, that, having regard to the accounts of the company and such other matters as may reasonably be regarded as relevant, constitutes profits of the company that would be available for distribution by the company by way of dividends if there were disregarded any requirement of the constituent document, or of any resolution or decision, of the company restricting the availability of the profits for distribution in that way, other than any requirement providing for an eligible provision or reserve.
double tax agreement
, in relation to a foreign country, means:
(a) if there is only one agreement (within the meaning of the International Tax Agreements Act 1953 ) in force in respect of the foreign country - that agreement; or
(b) if there are 2 or more agreements (within the meaning of that Act) in force in respect of the foreign country - the agreement that is expressed to be:
(i) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income; or
(ia) concerning the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income; or
(ii) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital; or
(iii) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital; or
(iv) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains; or
(v) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital and to certain other taxes.
eligible designated concession income
, in relation to a listed country, in relation to a particular period (in this definition called the
income period
), means designated concession income in relation to the listed country:
(a) that is not subject to tax in another listed country in a tax accounting period:
(i) ending before the end of the income period; or
(ii) commencing during the income period; or
(b) that is:
(i) subject to tax in another listed country in a tax accounting period:
(A) ending before the end of the income period; or
(B) commencing during the income period; and
(ii) designated concession income in relation to that other listed country.
eligible finance share
has the meaning given by section
327
.
eligible finance share dividend
means a dividend in respect of an eligible finance share.
eligible provision or reserve
means:
(a) a provision or reserve required to be maintained by law; or
(b) a provision for any liability in respect of foreign tax or Australian tax; or
(c) a reserve maintained for the purpose of qualifying for relief from foreign tax; or
(d) a provision or reserve for depreciation, bad or doubtful debts or leave payments; or
(e) any other provision or reserve of a kind prescribed by regulations for the purposes of this paragraph.
eligible transferor
has the meaning given by sections
347
and
348
.
entitled to acquire
has the meaning given by section
322
.
entity
means any of the following:
(a) a company;
(b) a partnership;
(c) a person in the capacity of trustee;
(d) any other person.
exempting profits
(Repealed by No 96 of 2004)
exempting profits percentage
(Repealed by No 96 of 2004)
exempting receipt
(Repealed by No 96 of 2004)
factoring income
means income derived from carrying on a business of factoring.
FlF attribution account entity
(Repealed by No 114 of 2010)
FIF attribution account payment
(Repealed by No 114 of 2010)
FIF attribution debit
(Repealed by No 114 of 2010)
financial intermediary business
means:
(a) banking business; or
(b) a business whose income is principally derived from the lending of money.
general insurance company
means a company whose sole or principal business is insurance business within the meaning of subsection 3(1) of the
Insurance Act 1973
, but does not include a life assurance company.
(a) ships, aircraft and other vehicles; and
(b) animals, including fish; and
(c) minerals, trees and crops, whether on, under or attached to land or not; and
(d) gas and electricity.
grossed-up amount
,
in relation to an attribution debit, has the meaning given by section
373
.
gross tainted turnover
has the meaning given by section
435
.
gross turnover
has the meaning given by section
434
.
(a) one entity alone; and
(b) a number of entities the members of which are not in any way associated with each other nor acting together.
income interest in a partnership
means an interest in the profits of the partnership.
income interest in a trust
means an interest in the income of the trust.
indirect attribution account interest
has the meaning given by section
369
.
indirect attribution interest
has the meaning given by section
357
.
indirect control interest
has the meaning given by section
352
.
IP time
means 7.30 p.m., by standard time in the Australian Capital Territory, on 12 April 1989.
law
, in relation to a listed country or an unlisted country, means a law of that listed country or unlisted country, or of any part of, or place in, that listed country or unlisted country.
lease
includes a sublease and, in relation to a company title interest in land, includes an agreement similar to a lease or sublease.
leased
includes let on hire (including a letting on hire that is described in the relevant agreement as a lease) under an agreement other than a hire-purchase agreement.
life assurance company
(Repealed by No 89 of 2000)
life assurance policy
(Repealed by No 89 of 2000)
life assurance premiums
(Repealed by No 89 of 2000)
limited-exemption listed country
(Repealed by No 96 of 2004)
listed country
has the meaning given by section
320
.
member of a non-portfolio company group
(Repealed by
No 143 of 2007
)
net tainted commodity gains
has the meaning given by section
443
.
net tainted currency exchange gains
has the meaning given by section
444
.
non-attributable income period
, in relation to a taxpayer in relation to a company in relation to the application of a provision of this Act in accordance with Division
7
, means a statutory accounting period of the company for which:
(a) there is no requirement to calculate under Division 7 the attributable income of the company in relation to the taxpayer; or
(b) there is a requirement to calculate under Division 7 the attributable income of the company in relation to the taxpayer, but the particular provision is not relevant to that calculation.
non-broad-exemption listed country
(Repealed by No 96 of 2004)
non-discretionary trust
means a trust other than a discretionary trust.
non-portfolio dividend
means a dividend (other than an eligible finance share dividend or a widely distributed finance share dividend) paid to a company where that company has a voting interest, within the meaning of section
334A
, amounting to at least 10% of the voting power, within the meaning of that section, in the company paying the dividend.
non-resident family trust
has the meaning given by section
328
.
non-share forward contract
means a forward contract that is not in respect of shares or a share price index.
non-share futures contract
means a futures contract that is not in respect of shares or a share price index.
notional allowable deduction
has the meaning given by subsection
382(2)
.
notional assessable income
has the meaning given by subsection
382(2)
.
notional exempt income
has the meaning given by subsection
382(2)
.
Part X Australian resident
means a resident within the meaning of section
6
, but does not include an entity where:
(a) there is a double tax agreement in force in respect of a foreign country; and
(b) that agreement contains a provision that is expressed to apply where, apart from the provision, the entity would, for the purposes of the agreement, be both a resident of Australia and a resident of the foreign country; and
(c) that provision has the effect that the entity is, for the purposes of the agreement, a resident solely of the foreign country.
passive income
has the meaning given by section
446
.
(a) premiums in respect of insurance or reinsurance; or
(b) life assurance premiums.
profits
includes gains, whether of an income or capital nature.
property management services
includes any of the following services:
(a) cleaning;
(b) secretarial;
(c) catering.
provide
, in relation to services, includes allow, confer, give, grant or perform.
public unit trust
has the meaning given by section
329
.
(a) in relation to a company, in relation to a statutory accounting period, means the accounts referred to in subparagraph 432(1)(c) that are prepared by the company for the statutory accounting period; or
(b) in relation to a partnership in which a company is a partner at any time during a statutory accounting period, means the accounts referred to in paragraph 437(1)(b) that are prepared by the partnership for the statutory accounting period.
rent
means any consideration (in this definition called a
rental consideration
) paid or given by a lessee under a lease and includes consideration (whether paid or given by a lessee or another person) in the nature of a rental consideration.
residency assumption
, in relation to a CFC, means the assumption about the residence of the CFC that is made in paragraph 383(a).
retention period
, in relation to a statutory accounting period, means the period of 5 years commencing at the end of the statutory accounting period.
sale
, in relation to goods, includes exchange or hire-purchase and
purchase
, when used in relation to goods,has a corresponding meaning.
services
includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under:
(a) an arrangement for or in relation to:
(i) the performance of work (including work of a professional nature), whether with or without the provision of property; or
(ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or
(iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; or
(b) a contract of insurance; or
(c) an arrangement for or in relation to the lending of money.
ship
means a vessel or boat of any description, and includes:
(a) an air-cushion vehicle; and
(b) any floating structure.
special excluded rental income
, in relation to a company, in relation to a statutory accounting period, means income derived by the company in the statutory accounting period by way of rent, where:
(a) the income was derived by the company from a CFC; and
(b) at all times during the statutory accounting period when the income accrued:
(i) the CFC was an associate of the company; and
(ii) the company was a resident of a particular listed country or a particular unlisted country; and
(iii) the CFC was also a resident of that listed country or that unlisted country, as the case may be; and
(c) the income was taxed in that listed country or that unlisted country, as the case may be, at the country ' s normal company tax rate (see section 325 ); and
(d) the income would not have been, in whole or in part, a notional allowable deduction of the CFC if it were assumed that the CFC had failed to pass the active income test in relation to any statutory accounting period of the CFC.
statutory accounting period
has the meaning given by section
319
.
subject to tax
has the meaning given by section
324
.
tainted asset
, in relation to a company, means:
(a) any of the following:
(i) loans (including deposits with a bank or other financial institution);
(ii) debenture stock, bonds, debentures, certificates of entitlement, bills of exchange, promissory notes or other securities;
(iii) shares in a company;
(iv) an interest in a trust or partnership;
(v) futures contracts;
(vi) forward contracts;
(vii) interest rate swap contracts;
(viii) currency swap contracts;
(ix) forward exchange rate contracts;
(x) forward interest rate contracts;
(xi) life assurance policies;
(xii) a right or option in respect of such a loan, security, share, interest, contract or policy;
(xiii) any similar financial instrument; or
(b) an asset that was held by the company solely or principally for the purpose of deriving tainted rental income; or
(c) an asset other than:
(i) trading stock; or
(ii) any other asset used solely in carrying on a business;
but does not include a commodity investment.
tainted commodity gain
, in relation to a company, in relation to a statutory accounting period, means:
(a) a gain realised by the company in the statutory accounting period from disposing of a tainted commodity investment; or
(b) a capital gain that the company would have made in the statutory accounting period because CGT event J1 would have happened in relation to a tainted commodity investment, if the assumptions in paragraphs 383(a) to (c) applied.
Note:
Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.
tainted commodity investment
, in relation to a company, means:
(a) either of the following contracts:
(i) a forward contract in respect of a commodity;
(ii) a futures contract in respect of a commodity; or
(b) a right or option in respect of such a contract;
except where either of the following conditions is satisfied:
(c) both of the following subparagraphs apply:
(i) the company carries on:
(A) a business of producing or processing the commodity; or
(B) a business that involves the use of the commodity as a raw material in a production process;
(ii) the contract, right or option relates to the carrying on of that business;
(d) both of the following subparagraphs apply in relation to the contract:
(i) the contract was entered into by the company for the sole purpose of eliminating or reducing the risk of adverse financial consequences that might result for the company, under another contract, from fluctuations in the price of the commodity;
(ii) the company does not and will not derive tainted sales income from a transaction under that other contract.
tainted commodity loss
, in relation to a company, in relation to a statutory accounting period, means:
(a) a loss realised by the company in the statutory accounting period from disposing of a tainted commodity investment; or
(b) a capital loss that the company would have made in the statutory accounting period because CGT event J1 would have happened in relation to a tainted commodity investment, if the assumptions in paragraphs 383(a) to (c) applied.
Note:
Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.
tainted currency exchange gain
, in relation to a company, in relation to a statutory accounting period, means a currency exchange gain realised by the company in the statutory accounting period except where the gain related to an active income transaction (within the meaning of section
439
).
tainted currency exchange loss
, in relation to a company, in relation to a statutory accounting period, means a currency exchange loss realised by the company during the statutory accounting period except where the loss related to an active income transaction (within the meaning of section
439
).
tainted income ratio
has the meaning given by section
433
.
tainted interest income
, in relation to a company, means:
(a) interest or a payment in the nature of interest; or
(b) an amount that, if the company were a resident within the meaning of section 6 , would be included in assessable income under Division 16E of Part III (or would be so included if Division 230 of the Income Tax Assessment Act 1997 did not apply); or
(c) factoring income;
but does not include:
(d) income (being interest, fees, commission or other amounts) derived by a person in respect of offshore banking transfers of the person; or
(e) income consisting of dividends or non-share dividends paid to a person by a company out of profits derived from the making of offshore banking transfers.
tainted rental income
(other than special excluded rental income), in relation to a company, in relation to a statutory accounting period, means income derived by the company in the statutory accounting period by way of rent in respect of any of the following:
(a) a lease to which an associate of the company was a party at the time the income was derived;
(b) a lease where any or all of the rent was paid or given by an associate of the company;
(c) a lease of land, except where the following conditions are satisfied:
(i) the land is situated in a listed country or in an unlisted country;
(ii) at all times during the period when the income accrued, the company was a resident of that country;
(d) a lease of land where the following conditions are satisfied:
(i) the land is situated in a listed country or in an unlisted country;
(ii) at all times during the period when the income accrued, the company was a resident of that country;
(iii) it is not the case that a substantial part of the income is attributable to the provision of labour-intensive property management services in connection with the land, being services provided by directors or employees of the company;
(e) a lease of either of the following:
(i) a ship;
except where a substantial part of the income is attributable to the provision by the directors or employees of the company of any of the following in relation to the ship or aircraft concerned:
(ii) an aircraft;
(iii) operating crew services;
(iv) maintenance services;
(v) management services;
(f) a lease of either of the following:
(i) a cargo container designed or intended for use on ships or aircraft as part of a containerised cargo handling system;
except where a substantial part of the income is attributable to the provision by the directors or employees of the company of either of the following in relation to the container, plant or equipment concerned:
(ii) plant or equipment designed or intended for use on board ships;
(iii) maintenance services;
(iv) management services.
tainted royalty income
, in relation to a company, means royalties derived by the company except where all of the following conditions are satisfied:
(a) the royalties are derived in the course of a business carried on by the company;
(b) at the time the royalties were derived, the entity liable to pay the royalties was not an associate of the company;
(c) either of the following subparagraphs applies:
(i) the matter or thing in respect of which the royalty is consideration originated with the company;
(ii) the company has substantially developed, altered or improved that matter or thing with the result that its market value was substantially enhanced.
tainted sales income
has the meaning given by section
447
.
tainted services income
has the meaning given by section
448
.
tax accounting period
, in relation to an entity, in relation to a foreign tax imposed by a tax law of a listed country, means the accounting period used by the entity for the purposes of determining the tax base under that law.
tax detriment
has the meaning given by section
330
.
tax law
, in relation to a listed country or an unlisted country, means:
(a) if the listed country or the unlisted country has federal foreign tax and either or both of the following:
(i) State foreign tax;
the law of the listed country or the unlisted country that imposes the federal foreign tax; or
(ii) municipal foreign tax;
(b) in any other case - the law of the listed country or the unlisted country that imposes foreign tax.
transitional finance share
has the meaning given by section
327B
.
transitional finance share dividend
means a dividend in respect of a transitional finance share.
(a) an entity in the capacity of trustee (including an entity that manages a trust if there is no trustee); or
(b) as the case requires, a trust or trust estate.
unlisted country
has the meaning given by section
320
.
widely distributed finance share
has the meaning given by section
327A
.
widely distributed finance share dividend
means a dividend in respect of a widely distributed finance share.
317(2)
Where, if all offshore borrowings made by persons when they were offshore banking units were taken to be tax exempt loan money of the persons for the purposes of Division 11A of Part III , an offshore loan, or other transfer, of an amount by a person would, for the purposes of that Division, be an offshore loan, or other transfer, of tax exempt loan money of the person, the offshore loan, or other transfer, of the amount is an offshore banking transfer of the person for the purposes of the definition of tainted interest income .
For the purposes of this Part, the following are associates of an entity (in this subsection called the primary entity ) that is a natural person (otherwise than in the capacity of trustee):
(a) a relative of the primary entity;
(b) a partner of the primary entity or a partnership in which the primary entity is a partner;
(c) if a partner of the primary entity is a natural person otherwise than in the capacity of trustee - the spouse or a child of that partner;
(d) a trustee of a trust where the primary entity, or another entity that is an associate of the primary entity because of another paragraph of this subsection, benefits under the trust;
(e) a company where:
(i) the company is sufficiently influenced by:
(A) the primary entity; or
(B) another entity that is an associate of the primary entity because of another paragraph of this subsection; or
(C) another company that is an associate of the primary entity because of another application of this paragraph; or
(D) 2 or more entities covered by the preceding sub-subparagraphs; or
318(2) [ Associates of a company]
(ii) a majority voting interest in the company is held by:
(A) the primary entity; or
(B) the entities that are associates of the primary entity because of subparagraph (i) of this paragraph and the preceding paragraphs of this subsection; or
(C) the primary entity and the entities that are associates of the primary entity because of subparagraph (i) of this paragraph and because of the preceding paragraphs of this subsection.
For the purposes of this Part, the following are associates of a company (in this subsection called the primary entity ):
(a) a partner of the primary entity or a partnership in which the primary entity is a partner;
(b) if a partner of the primary entity is a natural person otherwise than in the capacity of trustee - the spouse or a child of that partner;
(c) a trustee of a trust where the primary entity, or another entity that is an associate of the primary entity because of another paragraph of this subsection, benefits under the trust;
(d) another entity (in this paragraph called the controlling entity ) where:
(i) the primary entity is sufficiently influenced by:
(A) the controlling entity; or
(B) the controlling entity and another entity or entities; or
(ii) a majority voting interest in the primary entity is held by:
(A) the controlling entity; or
(B) the controlling entity and the entities that, if the controlling entity were the primary entity, would be associates of the controlling entity because of subsection (1), because of subparagraph (i) of this paragraph, because of another paragraph of this subsection or because of subsection (3);
(e) another company (in this paragraph called the controlled company ) where:
(i) the controlled company is sufficiently influenced by:
(A) the primary entity; or
(B) another entity that is an associate of the primary entity because of another paragraph of this subsection; or
(C) a company that is an associate of the primary entity because of another application of this paragraph; or
(D) 2 or more entities covered by the preceding sub-subparagraphs; or
(ii) a majority voting interest in the controlled company is held by:
(A) the primary entity; or
(B) the entities that are associates of the primary entity because of subparagraph (i) of this paragraph and the other paragraphs of this subsection; or
(C) the primary entity and the entities that are associates of the primary entity because of subparagraph (i) of this paragraph and the other paragraphs of this subsection;
(f) any other entity that, if a third entity that is an associate of the primary entity because of paragraph (d) of this subsection were the primary entity, would be an associate of that third entity because of subsection (1), because of another paragraph of this subsection or because of subsection (3).
For the purposes of this Part, the following are associates of a trustee (in this subsection called the primary entity ):
(a) any entity that benefits under the trust;
(b) if a natural person benefits under the trust - any entity that, if the natural person were the primary entity, would be an associate of that natural person because of subsection (1) or because of this subsection;
(c) if a company is an associate of the primary entity because of paragraph (a) or (b) of this subsection - any entity that, if the company were the primary entity, would be an associate of the company because of subsection (2) or because of this subsection. 318(4) [ Associates of a partnership]
For the purposes of this Part, the following are associates of a partnership (in this subsection called the primary entity ):
(a) a partner in the partnership;
(b) if a partner in the partnership is a natural person - any entity that, if that natural person were the primary entity, would be an associate of that natural person because of subsection (1) or (3);
(c) if a partner in the partnership is a company - any entity that, if the company were the primary entity, would be an associate of the company because of subsection (2) or (3). 318(5) [Public unit trust entity]
In determining, for the purposes of this section, whether an entity is an associate of another entity at a particular time (in this subsection called the test time ):
(a) an entity (in this subsection called the public unit trust entity ) that, apart from this subsection, is the trustee of a public unit trust at the test time is to be treated as if it were a company instead of a trustee; and
(b) the public unit trust entity is taken to be sufficiently influenced by another entity or other entities if the public unit trust entity is accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the other entity or other entities (whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed companies, partnerships or trusts); and
(c) another entity or other entities are taken to hold a majority voting interest in the public unit trust entity if either of the following percentages is not less than 50%:
(i) the percentage of the income of the trust represented by the share of the income to which the other entity or other entities are entitled, or that the other entity or other entities are entitled to acquire;
318(6) [ Interpretation]
(ii) the percentage of the corpus of the trust represented by the share of the corpus to which the other entity or other entities are entitled, or that the other entity or other entities are entitled to acquire.
For the purposes of this section:
(a) a reference to an entity benefiting under a trust is a reference to the entity benefiting, or being capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust, either directly or through any interposed companies, partnerships or trusts; and
(b) a company is sufficiently influenced by an entity or entities if the company, or its directors, are accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the entity or entities (whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed companies, partnerships or trusts); and
(c) an entity or entities hold a majority voting interest in a company if the entity or entities are in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company. 318(7)
In this section and any other provision of this Act that has effect for the purposes of this section, a reference to the spouse of a person does not include:
(a) a spouse who is legally married to the person but living separately and apart from the person on a permanent basis; or
(b) a spouse within the meaning of paragraph (a) of the definition of spouse in subsection 995-1(1) of the Income Tax Assessment Act 1997 who is living separately and apart from the person on a permanent basis.
Subject to this section, each period of 12 months finishing at the end of 30 June is a statutory accounting period of a company.
319(2) [Election to adopt new period]A company may, by notice in writing to the Commissioner, elect that a day (in this section called the new day )is to be the last day of its statutory accounting period instead of the day (in this section called the old day ) that would otherwise apply under this section.
319(3) [New day](a) if:
(i) the company has not previously given a notice under this section; and
either of those days; or
(ii) the company regularly uses:
(A) an accounting period of 12 months finishing at the end of a day other than 30 June for the purposes of complying with the requirements of a tax law of any country; or
(B) an accounting period of 12 months finishing at the end of a day other than 30 June for the purposes of reporting to its shareholders;
(b) if the company has previously given a notice under this section - 30 June or either of the days that, but for the giving of the notice, would be applicable under paragraph (a). 319(4) [First and later periods on election]
Subject to any further application of subsection (2) and to subsections (4A) and (5):
(a) the first statutory accounting period using the new day is the period that begins immediately after the end of the statutory accounting period (using the old day) during which the election was made; and
(b) later statutory accounting periods are the successive periods of 12 months finishing at the end of the new day.
Subject to subsection (5), if:
(a) the election is made in the company's statutory accounting period in which the company first became a CFC; and
(b) the new day occurs after the election is made but before the old day;
then, subject to any further application of subsection (2):
(c) that statutory accounting period finishes at the end of the new day; and
(d) later statutory accounting periods are the successive periods of 12 months finishing at the end of the new day.
Where, when it makes the election, it is less than 12 months since the company was incorporated or otherwise established:
(a) the reference in subparagraph (3)(a)(ii) to the company regularly using an accounting period is instead a reference to the company proposing to use the accounting period; and
(b) subject to any further application of subsection (2):
(i) the first statutory accounting period of the company is the period beginning at the time of incorporation or establishment and ending at the end of the new day; and
319(6) [Company ceases to exist before end of statutory accounting period]
(ii) later statutory accounting periods are the successive periods of 12 months finishing at the end of the new day.
(a) the company is a CFC at the beginning of what is, disregarding this subsection, a statutory accounting period; and
(b) the company ceases to exist before the end of the statutory accounting period;
the statutory accounting period ends immediately before the company ceases to exist.
For the purposes of applying this section to a company, if:
(a) the company is a CFC at a particular time; and
(b) an entity is the only attributable taxpayer in relation to the company at that time; and
(c) the entity's attribution percentage in relation to the company is 100% at that time;
then, instead of a notice being given under subsection (2) by the company at that time, the notice may be given at that time by the entity.
In this Part:
broad-exemption listed country
(Repealed by No 96 of 2004)
limited-exemption listed country
(Repealed by No 96 of 2004)
listed country
means a foreign country, or a part of a foreign country, that is declared by the regulations to be a listed country for the purposes of this Part.
non-broad exemption listed country
(Repealed by No 96 of 2004)
section 404 country
(Repealed by No 110 of 2014)
(a) a foreign country that does not (either in whole or in part) consist of a listed country or listed countries; or
(b) if one or more parts of a foreign country are listed countries - the remainder of that foreign country.
320(2)
Subject to this section, for the purposes of this section, if, apart from this section:
(a) a colony, overseas territory or protectorate of a foreign country; or
(b) an overseas territory for the international relations of which a foreign country is responsible;
is not a foreign country in its own right, the colony, territory or protectorate is taken to be a foreign country in its own right.
320(3)
Subject to subsection (4), for the purposes of this section, if, apart from this subsection and subsection (4), there are 2 or more foreign countries with a common income tax system, those countries are to be treated as the same country.
320(4)
For the purposes of this section, if, apart from this subsection, one or more parts of a particular foreign country are excluded (either expressly or by implication) from the operation of a double tax agreement in force in relation to the foreign country, the part or parts so excluded are to be taken to constitute a separate foreign country.
For the purposes of the application of section 6AB to this Part, each listed country and each unlisted country is to be treated as a separate foreign country.
For the purposes of this Part, an entity is entitled to acquire anything that the entity is absolutely or contingently entitled to acquire, whether because of any constituent document of a company, the exercise of any right or option or for any other reason.
If, apart from this section, a listed country or an unlisted country has both:
(a) federal foreign tax; and
(b) State foreign tax;
the regulations may provide that a specified State foreign tax is to be treated, for the purposes of this Part, as if it were an additional federal foreign tax of the listed country or the unlisted country.
Subject to this section, for the purposes of this Part, a particular item of income or profits derived by an entity is taken to be subject to tax in a listed country in a particular tax accounting period if, and only if, foreign tax (other than a withholding-type tax) is payable under a tax law of the listed country in respect of the item because the item is included in the tax base of that law for the tax accounting period.
(a) apart from this subsection and subsections (3) and (4), a particular item of income or profits derived by an entity is not subject to tax in a listed country in a particular tax accounting period; and
(b) apart from a feature of a kind specified in the regulations, the item would have been subject to tax in the listed country in the tax accounting period;
the regulations may provide that the item is to be treated, for the purposes of this Part or one or more specified provisions of this Part, as if it were subject to tax in the listed country in the tax accounting period.
(a) an entity becomes a resident of a particular listed country (in this section called the " current listed country " ) at a particular time (in this section called the " residence-change time " ); and
(b) the entity owns an asset at the residence-change time; and
(c) the entity disposes of the asset while a resident of the current listed country;
then, for the purposes of this Part:
(d) if, apart from this paragraph, the only part of a capital gain on the disposal of the asset that is subject to tax in the listed country is the part that relates to the period after the residence-change time - the whole of the capital gain, whether it relates to the period before or after the residence-change time, is, subject to subsection (4), taken to be subject to tax in the current listed country; and
(e) subsection (4) applies.
(a) a capital gain on the disposal of the asset would, apart from this subsection and whether or not paragraph (3)(d) applies, be subject to tax in the current listed country; and
(b) at a time or times when it owned the asset before the residence-change time (but disregarding any time or times before a change of residence from an unlisted country to a listed country), the entity was a resident of one or more listed countries (each of which is in this subsection called a " previous listed country " ); and
(c) if the entity had disposed of the asset when it ceased to be a resident of a particular previous listed country (in this subsection called the " non-taxing listed country " ), any capital gain on the disposal would not have been subject to tax in that country; and
(d) if the entity had disposed of the asset when it ceased to be a resident of another previous listed country after the non-taxing listed country, any capital gain on the disposal would not have been subject to tax in that other previous listed country to the extent that it relates to the period of residence by the entity in the non-taxing listed country;
then, for the purposes of this Part, so much of the gain as relates to the period of residence in the non-taxing listed country is taken not to be subject to tax in the current listed country.
Note:
Section 830-75 of the Income Tax Assessment Act 1997 sets out additional circumstances, relating to entities that are foreign hybrids, in which a gain or profit is subject to tax in a listed country.
For the purposes of this Part, a dividend or other amount of a particular kind is to be taken to be taxed in a listed country at the country's normal company tax rate if, and only if:
(a) foreign tax is payable under a tax law of the listed country in respect of the dividend or the other amount of a particular kind at the same rate as, or a higher rate than, is payable under the tax law in respect of non-dividend income, or non-dividend amounts not of that particular kind, as the case may be, included in the tax base of a company that is a resident of the listed country; and
(b) the tax law of the listed country does not provide for any credit, rebate or other tax concession in respect of the dividend or the other amount of a particular kind, other than for foreign tax payable under a tax law of a different listed or an unlisted country. 325(2) [Unlisted country]
For the purposes of this Part, a dividend or other amount of a particular kind is taken to be taxed in an unlisted country at the country's normal tax rate if, and only if:
(a) foreign tax is payable under a tax law of the unlisted country in respect of the dividend or the other amount of a particular kind at the same rate as, or a higher rate than, is payable under the tax law in respect of non-dividend income, or non-dividend amounts not of that particular kind, as the case may be, included in the tax base of a company that is a resident of the unlisted country; and
(b) the tax law of the unlisted country does not provide for any credit, rebate or other tax concession in respect of the dividend or the other amount of a particular kind, other than for foreign tax payable under a tax law of a different unlisted or a listed country.
For the purposes of this Part, a company is an AFI subsidiary (or an Australian financial institution subsidiary) at a particular time if either of the following paragraphs applies:
(a) at that time, there is a group of 5 or fewer AFI entities the aggregate of whose direct control interests and indirect control interests in the company is not less than 50%;
(b) both of the following subparagraphs apply:
(i) at that time, there is a single AFI entity (in this paragraph called the " assumed controller " ) the aggregate of whose direct control interests and indirect control interests in the company is not less than 40%;
326(2) [AFI entity]
(ii) at that time, the company is not controlled by a group of entities not being or including the assumed controller or any of its associates.
A reference in this section to an AFI entity is a reference to:
(a) a company that is an AFI; or
(b) a 100% subsidiary of such a company. 326(3) [Company a 100% subsidiary of holding company]
For the purposes of this section, a company (in this subsection called the ``subsidiary company'' ) is taken to be the 100% subsidiary of another company (in this subsection called the ``holding company'' ) at a particular time if:
(a) at that time, all the shares in the subsidiary company were beneficially owned by:
(i) the holding company; or
(ii) a company that is, or 2 or more companies each of which is, a 100% subsidiary of the holding company; or
(iii) the holding company and a company that is, or 2 or more companies each of which is, a 100% subsidiary of the holding company; and
(b) there was no agreement, arrangement or understanding in force at that time by virtue of which any person was in a position, or would be in a position after that time, to affect rights of the holding company or of a 100% subsidiary of the holding company in relation to the subsidiary company. 326(4) [Subsidiary of 100% subsidiary company]
For the purposes of this section, where a company is a 100% subsidiary of another company (including a company that is such a 100% subsidiary by virtue of another application or other applications of this subsection), every company that is a 100% subsidiary of the first-mentioned company is taken to be a 100% subsidiary of that other company.
326(5) [Right, power or option re subsidiary company]For the purposes of subsection (3), a person is taken to be in a position at a particular time to affect any rights of a company in relation to another company if, at that time, that person has a right, power or option (whether by virtue of any provision of the constituent document of either of those companies or by virtue of any agreement or instrument or otherwise) to acquire those rights or do an act or thing that would prevent the first-mentioned company from exercising those rights for its own benefit or receiving any benefits accruing by reason of those rights.
For the purposes of this Part, a share in a company is an eligible finance share if all the following conditions are satisfied:
(a) the shareholder is an AFI or an AFI subsidiary;
(b) the share was issued to the shareholder by the company in the ordinary course of business carried on by the shareholder;
(c) the shareholder is not an associate of the company;
(d) having regard to:
(i) the manner in which the amount of dividends in respect of the share are to be calculated; and
(ii) the conditions applicable to the payment of dividends in respect of the share; and
the payment of the dividends in respect of the share may reasonably be regarded as equivalent to the payment of interest on a loan where the interest accrues at intervals not exceeding 12 months and is paid not later than 12 months after it accrues.
(iii) any other relevant matters;
For the purposes of this Part, a share in a company is a widely distributed finance share if both:
(a) either:
(i) the company is an eligible listed company; or
(ii) the aggregate of the eligible share interests in the company held by an eligible listed company is 90% or more; and
(b) the share is a recognised finance share. 327A(1A) Extended meaning of ``widely distributed finance shares'' - funding of transitional finance shares.
For the purposes of this Part, if:
(a) apart from this subsection, shares (in this subsection called the ``test shares'' ) in a company are not widely distributed finance shares; and
(b) as a result of the operation of subsection 327B(3) in relation to the shares:
(i) the shares are taken to be widely distributed finance shares for the purposes of section 327B ; and
(ii) shares in another company are transitional finance shares;
the test shares are taken to be, and to have been, widely distributed finance shares.
For the purposes of this section, a company is an eligible listed company at a particular time during a statutory accounting period of the company if:
(a) shares in the company (other than shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) are listed for quotation in the official list of a stock exchange in Australia or elsewhere; and
(b) none of the following subparagraphs apply:
(i) at any time during the statutory accounting period, a single entity, or less than 21 entities, held, or were entitled to acquire, 75% or more of the paid-up share capital of the company (other than capital represented by shares entitled to a fixed rate of dividend only);
(ii) at any time during the statutory accounting period, a single entity, or less than 21 entities held, or were entitled to acquire, 75% or more of the total rights (other than rights arising in respect of shares entitled to a fixed rate of dividend only) of shareholders to vote, or participate in any decision-making, concerning any of the following:
(A) the making of distributions of capital or profits of the company to its shareholders;
(B) the constituent document of the company;
(C) any variation of the share capital of the company;
(iii) 75% or more of the total amount of all of the dividends paid by the company (other than dividends paid in respect of shares entitled to a fixed rate of dividend only) during the statutory accounting period was paid to a single entity or to less than 21 entities;
327A(3) Meaning of ``recognised finance shares''.
(iv) dividends (other than dividends paid in respect of shares entitled to a fixed rate of dividend only) were not paid by the company during the statutory accounting period but it would be concluded that, if such dividends had been paid by the company during the statutory accounting period, 75% or more of those dividends would have been paid to a single entity or to less than 21 entities.
For the purposes of this section, shares in a company are recognised finance shares if all the following conditions are satisfied:
(a) the shareholder is not an associate of the company;
(b) having regard to:
(i) the manner in which the amount of dividends in respect of the shares are to be calculated; and
(ii) the conditions applicable to the payment of dividends in respect of the shares; and
the payment of the dividends in respect of the shares may reasonably be regarded as equivalent to the payment of interest on a loan;
(iii) any other relevant matters;
(c) having regard to:
(i) the arrangements under which the shares were offered for subscription; and
(ii) the ordinary business practices of brokers, agents, underwriters or other persons who took part in the arrangements for the issue of the shares; and
(iii) the arrangements that were made for dealing with applications that were made for subscription of the shares; and
it is reasonable to regard the shares as having been issued with a view to public subscription or purchase or other wide distribution among investors. 327A(4) Meaning of ``eligible share interest''.
(iv) any circumstances indicating the existence, at the time of the issue of the shares, of any arrangement for any of the shares to be offered for subscription, or purchased after subscription, by entities connected:
(A) with each other; or
(B) with the company issuing the shares; or
(C) with a person by whom the amounts raised by the subscription, or amounts derived directly or indirectly from those amounts, were intended to be used;
For the purposes of this section, a person holds an eligible share interest in a company at a particular time equal to the percentage of the company's total paid-up share capital (excluding recognised finance shares) beneficially owned by the person at that time.
327A(5) Extended meaning of ``eligible share interest'': tiers of companies.For the purposes of this section, if:
(a) a person holds an eligible share interest (including an eligible share interest that is taken to be held because of one or more previous applications of this subsection) in a company (in this subsection called the ``first level company'' ); and
(b) the first level company holds an eligible share interest in another company (in this subsection called the ``second level company'' );
the person is taken to hold an eligible share interest in the second level company equal to the percentage calculated using the formula:
| First level percentage × Second level percentage |
where:
`` First level percentage '' means the percentage of the eligible share interest held by the person in the first level company;
`` Second level percentage '' means the percentage of the eligible share interest held by the first level company in the second level company.
327A(6) Definitions.In this section:
"eligible listed company"
has the meaning given by subsection (2);
"eligible share interest"
has the meaning given by subsections (4) and (5);
"recognised finance share"
has the meaning given by subsection (3).
For the purposes of this Part, shares (in this subsection called the ``test shares'' ) in a company (in this subsection called the ``second company'' ) are transitional finance shares at a particular time (in this subsection called the ``test time'' ) if all of the following conditions are satisfied:
(a) the test time is before 1 July 1998;
(b) the test shares are finance shares;
(c) during a period (in this subsection called the ``primary issue period'' ) ending before the IP time, another company (in this subsection called the ``first company'' ) issued widely distributed finance shares;
(d) the issue of the widely distributed finance shares comprised the whole of a common issue of shares by the first company;
(e) the issue of the test shares comprised the whole of a common issue of shares by the second company;
(f) the test shares were simultaneously issued to the first company by the second company at, or within a reasonable time after, the end of the primary issue period;
(g) the widely distributed finance shares were issued by the first company for the sole purpose of funding the first company's acquisition of the test shares;
(h) assuming that the test shares had been issued at the end of the primary issue period, the following conditions would have been satisfied at all times during the period commencing at the end of the primary issue period and ending at the test time:
(i) the rights and obligations relating to the widely distributed finance shares are substantially similar to the rights and obligations relating to the test shares;
(ii) the first company and the second company are under common ownership;
(i) if, on the assumption that the dividends in respect of the test shares were instead payments of the interest, referred to in subsection (2), to which they may reasonably be regarded as equivalent, the following conditions would have been satisfied in relation to that interest:
(i) the interest that accrued during the 24-month period ending at the test time accrued at intervals not exceeding 12 months;
(ii) the interest that accrued during the 12-month period commencing 24 months before the test time was paid not later than 12 months after it accrued;
(iii) the dividends paid in respect of the widely distributed finance shares during the 12-month period ending at the test time are wholly attributable to the interest that accrued during the 12-month period ending at the time the dividends were paid;
327B(2) Meaning of ``finance shares''.
(iv) the total amount of dividends paid in respect of the widely distributed finance shares during the 12-month period ending at the test time is equal to, or approximately equal to, the total amount of interest to which the dividends are attributable.
For the purposes of this section, shares in a company are finance shares if, and only if, having regard to:
(a) the manner in which the amount of dividends in respect of the shares was to be calculated; and
(b) the conditions applicable to the payment of dividends in respect of the shares; and
(c) any other relevant matters;
the payment of the dividends in respect of the shares may reasonably be regarded as equivalent to the payment of interest on a loan.
327B(3) Modification of ``widely distributed finance shares''.For the purposes of this section, in determining whether shares are widely distributed finance shares, if an asset is held by an entity as trustee for another entity who is absolutely entitled to the asset against the trustee, paragraph 327A(2)(b) has effect as if:
(a) the asset were vested in the other entity instead of the trustee; and
(b) if the asset is a share - any dividends paid in respect of the share were paid to the other entity instead of to the trustee. 327B(4) Meaning of ``under common ownership''.
For the purposes of this section, 2 companies are under common ownership at a particular time if, and only if:
(a) another company (in this subsection called the ``third company'' ) holds eligible share interests in each of the companies; and
(b) the aggregate of the eligible share interests in each company held by the third company is 90% or more. 327B(5) Meaning of ``eligible share interest''.
For the purposes of this section, a person holds an eligible share interest in a company at a particular time equal to the percentage of the company's total paid-up share capital (excluding finance shares) beneficially owned by the person at that time.
327B(6) Extended meaning of ``eligible share interest'': tiers of companies.For the purposes of this section, if:
(a) a person holds an eligible share interest (including an eligible share interest that is taken to be held because of one or more previous applications of this subsection) in a company (in this subsection called the ``first level company'' ); and
(b) the first level company holds an eligible share interest in another company (in this subsection called the ``second level company'' );
the person is taken to hold an eligible share interest in the second level company equal to the percentage calculated using the formula:
| First level percentage × Second level percentage |
where:
`` First level percentage '' means the percentage of the eligible share interest held by the person in the first level company;
`` Second level percentage '' means the percentage of the eligible share interest held by the first level company in the second level company.
327B(7) Definitions.In this section:
"eligible share interest"
has the meaning given by subsections (5) and (6);
"finance share"
has the meaning given by subsection (2);
"under common ownership"
has the meaning given by subsection (4);
"widely distributed finance share"
has a meaning affected by subsection (3).
Subject to subsections (4) and (5), for the purposes of this Part, a trust is a non-resident family trust in relation to a natural person at a particular time if, and only if, at that time:
(a) the trust is either:
(i) a post-marital or post-relationship family trust in relation to the natural person; or
(ii) a family relief trust in relation to the natural person; and
(b) the trust is constituted by:
(i) a deed of trust or other instrument; or
(ii) an order or declaration of a court.
For the purposes of this section, a trust is a post-marital or post-relationship family trust in relation to a natural person at a particular time if:
(a) either of the following conditions is satisfied:
(i) the trust was created pursuant to:
(A) a decree or order of dissolution or annulment of marriage, being a dissolution or annulment that, because of the Family Law Act 1975 , has effect, or continues to have effect in Australia or is recognised as valid in Australia; or
(B) a decree or order of judicial separation or a similar decree or order;
(ii) the trust was created in consequence of the break-down of a de facto relationship; and
(b) at that time, the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust (which persons are in subsections (4) and (5) called the " primary potential beneficiaries " ) are natural persons who:
(i) are not Part X Australian residents at that time; and
(ii) are covered by any of the following categories:
(A) the spouse or former spouse of the natural person;
(B) a child of the natural person;
(C) a child of the former spouse of the natural person, being a child who was such a child at a time when the former spouse was the spouse of the natural person;
(D) a child of the spouse of the natural person.
For the purposes of this section, a trust is a family relief trust in relation to a natural person at a particular time (in this subsection called the " test time " ) if:
(a) the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust (which persons are in subsections (4) and (5) called the " primary potential beneficiaries " ) are natural persons who:
(i) are identified by name in the trust deed or instrument, or in the court order or declaration, constituting the trust; and
(ii) are not Part X Australian residents at that time; and
(iii) are covered by any of the following categories:
(A) the spouse or former spouse of the natural person;
(B) a parent of the natural person or of the natural person's spouse or former spouse;
(C) a child of the natural person or of the natural person's spouse or former spouse;
(D) a grandparent of the natural person;
(E) a grandchild of the natural person;
(F) a brother or sister of the natural person or of the natural person's spouse or former spouse;
(G) a child of a brother or sister mentioned in sub-subparagraph (F); and
(b) the trust was established, and is operated, for the relief of persons who are in necessitous circumstances; and
(c) any of the following conditions is satisfied:
(i) at the test time, the assets of the trust are not excessive having regard to the requirements, or likely requirements, of the primary potential beneficiaries;
(ii) no transfers of property or services to the trust were made during the period (in this paragraph called the " test period " ) commencing at the IP time and ending at the test time;
(iii) immediately after each transfer of property or services to the trust made during the test period, the assets of the trust were not excessive having regard to the requirements, or likely requirements, of the beneficiaries at the time of the transfer.
Note:
Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining relationships for the purposes of subparagraph (3)(a)(iii).
Subsection (1) does not prevent a trust from being a non-resident family trust in relation to a natural person at a particular time if, in the event of the death of a particular primary potential beneficiary at that time one or more natural persons (which persons are in subsection (5) called the " secondary potential beneficiaries " ) who:
(a) are not Part X Australian residents at that time; and
(b) are children of the primary potential beneficiary;
would benefit, or be capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust.
328(5) [ Death of primary and secondary potential beneficiaries]Subsections (1) and (4) do not prevent a trust from being a non-resident family trust in relation to a natural person at a particular time if, in the event of the death of all of the primary potential beneficiaries and all of the secondary potential beneficiaries at that time, there are one or more deductible gift recipients covered by an item in any of the tables in Subdivision 30-B of the Income Tax Assessment Act 1997 , or item 2 of the table in section 30-15 of that Act, that would benefit, or be capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust.
For the purposes of this section, if, at a particular time, an entity holds an interest in, or right to benefit under, a trust that is dependent on the death of one or more natural persons, then, the entity is taken to be an entity who, in the event of the death of that natural person or those natural persons immediately after that time, would benefit under the trust.
328(7) [ Reference to natural person]A reference in this section to a natural person does not include a reference to a natural person in the capacity of a trustee.
For the purposes of this Part, a unit trust is a public unit trust at a particular time if, assuming that the 12 month period ending at that time had been a year of income, the unit trust would have been a public unit trust at all times during the year of income for the purposes of Division 6AAA of Part III .
For the purposes of this Part, each of the following is a tax detriment to a partner in a partnership:
(a) an increase in an amount included under section 92 in the partner's assessable income in respect of an interest in the net income of the partnership;
(b) a reduction in an amount allowable under section 92 as a deduction to the partner in respect of the partner's interest in a partnership loss of the partnership;
(c) a combination of such a reduction to nil and such an increase. 330(2) [Tax detriment to beneficiary]
For the purposes of this Part, an increase in an amount included under section 97 , 98A or 100 in the assessable income of a beneficiary in respect of a share of the net income of a trust is a tax detriment to the beneficiary.
330(3) [Tax detriment to trustee]For the purposes of this Part, an increase (including from nil) in an amount assessable to a trustee under section 98 in respect of a beneficiary's share of, or under section 99 or 99A in respect of the whole or a part of, the net income of a trust is a tax detriment to the trustee.
330(4) [Amount of tax detriment]The amount of the tax detriment is equal to the amount of the increase or reduction or, where paragraph (1)(c) applies, the sum of the amounts of the reduction and increase.
If the tax law of a listed country or an unlisted country adopts some criterion other than treatment as a resident as the criterion for applying a worldwide source tax base to a company, then, sections 332 , 332A and 333 have effect, in relation to that tax law, as if that criterion were the same as treatment as a resident of the listed country or the unlisted country for the purposes of that tax law.
For the purposes of this Part, a company is a resident of a listed country at a particular time if, and only if, the company is, in accordance with subsection (2), a resident of a particular listed country at that time.
332(2) [Conditions must be satisfied]For the purposes of this Part, a company is a resident of a particular listed country at a particular time if, and only if, both of the following conditions are satisfied at that time:
(a) the company is not a Part X Australian resident;
(b) the company is treated as a resident of the listed country for the purposes of the tax law of the listed country.
(Repealed by No 110 of 2014)
For the purposes of this Part, a company is a resident of an unlisted country at a particular time if, and only if:
(a) the company is, in accordance with subsection (2), a resident of a particular unlisted country at that time; or
(b) paragraph (a) does not apply and the company is at that time neither:
(i) a Part X Australian resident; nor
333(2) [Particular unlisted country]
(ii) a resident of a particular listed country.
For the purposes of this Part, a company is a resident of a particular unlisted country (in this section called the unlisted country of residence ) at a particular time if, and only if:
(a) the company is not a Part X Australian resident at that time; and
(b) the company is not treated as a resident of a listed country at that time for the purposes of the tax law of the listed country; and
(c) any of the following subparagraphs applies:
(i) both of the following conditions are satisfied at that time:
(A) the company is treated as a resident of the unlisted country of residence for the purposes of the tax law of the unlisted country of residence;
(B) the company is not treated as a resident of any other unlisted country for the purposes of the tax law of the unlisted country;
(ii) both of the following conditions are satisfied at that time:
(A) the company is treated as a resident of the unlisted country of residence and at least one other unlisted country for the purposes of the tax laws of each of those unlisted countries;
(B) the company is incorporated in the unlisted country of residence;
(iii) both of the following conditions are satisfied at that time:
(A) the company is not treated as a resident of any unlisted country for the purposes of the tax law of the unlisted country;
(B) the company's management and control is solely or principally located in the unlisted country of residence;
(iv) all of the following conditions are satisfied at that time:
(A) the company is not treated as a resident of any unlisted country for the purposes of the tax law of the unlisted country;
(B) the company's management and control is not solely or principally located in the unlisted country of residence;
(C) the company is incorporated in the unlisted country of residence.
(Repealed by No 143 of 2007 )
For the purposes of this section, a company is taken to have a voting interest in another company if:
(a) the first-mentioned company is the beneficial owner of shares (other than eligible finance shares or widely distributed finance shares) in the other company that carry the right to exercise any of the voting power in the other company; and
(b) there is no arrangement in force at the relevant time by virtue of which any person is in a position, or may become in a position, to affect that right;
and the extent of the voting interest is taken to be the total number of votes that, by virtue of that right, can be cast on a poll at, or arising out of, a general meeting of the other company as regards all questions that could be submitted to such a poll.
334A(2) [ Affecting a right]For the purposes of paragraph (1)(b), a person is taken to be in a position to affect a right of a company if that person has a right, power or option (whether by virtue of any provision in the constituent document of any company or by virtue of any agreement or instrument or otherwise) to acquire that right or do an act or thing that would prevent the first-mentioned company from exercising that right or receiving any benefits accruing by reason of that right.
334A(3) [ Appointment of liquidator]Despite paragraph (1)(b) and subsection (2), in determining for the purposes of this section:
(a) whether a company has a voting interest in another company; and
(b) the extent of that interest;
any appointment of a liquidator in respect of the other company is to be disregarded.
334A(4) [ Voting power]For the purposes of this section, the voting power in a company is the maximum number of votes that can be cast on a poll at, or arising out of, a general meeting of a company as regards all questions that can be submitted to such a poll.
334A(5) [ " arrangement " ]In this section, arrangement includes:
(a) any agreement, arrangement, understanding, promise or undertaking, whether expressed or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.
Unless otherwise expressly provided, references in this Part are to matters and things whether occurring before or after the commencement of this Part.