Taxation Laws Amendment (Foreign Income) Act 1990

Act No. 5 of 1991 as amended

This compilation was prepared on 6 October 2010
taking into account amendments up to Act No. 75 of 2010

The text of any of those amendments not in force
on that date is appended in the Notes section

The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section

Prepared by the Office of Legislative Drafting and Publishing,
Attorney-General’s Department, Canberra

TABLE OF PROVISIONS

PART 1 - PRELIMINARY

Section

1. Short title [see Note 1]

2. Commencement [see Note 1]

PART 2 - AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Division 1 - Amendments

3. Principal Act

4. Interpretation

5. Foreign income and foreign tax

6. Grossing-up of foreign income

7. Income beneficially derived

8. Insertion of new sections:

23AH. Exemption of foreign branch profits of Australian

companies

23AI. Exemption of amounts paid out of attributed income

23AJ. Exemption of certain non-portfolio dividends from foreign

countries

9. Insertion of new section:

47A. Distribution benefits - CFCs

10. Repeal of section and substitution of new section:

79D. Limitation on deductions for foreign income

11. General domestic losses of post-1989 years of income

12. General domestic losses of pre-1990 years of income

13. Film losses of pre-1990 years of income

14. Primary production losses of pre-1990 years of income

15. Transfer of loss within company group

16. Receipt of trust income not previously subject to tax

17. Revocable trusts

18. Insertion of new Division:

Division 6AAA - Special Provisions relating to Non-resident Trust

Estates etc.

Subdivision A - Preliminary

102AAA. Object of Division

102AAB. Interpretation

102AAC. Each listed country and unlisted country to be treated as

a separate foreign country

102AAD. `Subject to tax' - application of subsection 324 (2)

102AAE. Listed country trust estates

102AAF. Public unit trusts

102AAG. When entity is in a position to control a trust estate

102AAH. Non-resident family trusts

102AAJ. Transfer of property or services

102AAK. Deemed transfers of property or services to trust estate

102AAL. Division not to apply to transfers by trustees of deceased

estates

Subdivision B - Payment of Interest by Taxpayer on Distributions

from Certain Non-resident Trust Estates

102AAM. Payment of interest by taxpayer on distributions from

certain non-resident trust estates

Subdivision C - Winding-up of Non-resident Trust Estates in

Existence on 12 April 1989

102AAN. Winding-up of non-resident trust estates - tax rebates

102AAP. Winding-up of non-resident discretionary trusts –

adjustment of tax treatment of beneficiaries

102AAQ. Winding-up of non-resident trust estates – modified

accruals system of taxation

102AAR. When trust estate is taken to be completely wound up

Subdivision D - Accruals System of Taxation of Certain Non-resident

Trust Estates

102AAS. Object of Subdivision

102AAT. Accruals system of taxation - attributable taxpayer

102AAU. Attributable income of a trust estate

102AAV. Double tax agreements to be disregarded

102AAW. Certain provisions to be disregarded in calculating

attributable income

102AAX. Income and expenses to be expressed in Australian currency

102AAY. Modified application of trading stock provisions

102AAZ. Modified application of depreciation provisions

102AAZA. Modified application of Division 13 of Part III

102AAZB. Modified application of Part IIIA

102AAZC. Modified application of loss provisions - pre-1990-91

losses

102AAZD. Assessable income of attributable taxpayer to include

attributable income of trust estate to which taxpayer has

transferred property or services

102AAZE. Accruals system of taxation does not apply to small

amounts

102AAZF. Only resident partners, beneficiaries etc. liable to be

assessed as a result of attribution

102AAZG. Keeping of records

19. Loans etc. to shareholders and associates deemed to be dividends

20. Interpretation

21. Deductions to be allowable for expenditure incurred in gaining

superannuation premiums

22. Deductions to be allowable for expenditure incurred in gaining the

investment component of certain premiums

23. Exemption of income attributable to certain policies etc.

24. Repeal of section 112B

25. Notional Part IIIA disposals of fund assets

26. Amount of assessable income in particular class

27. Consequential adjustments to assessable income and allowable

deductions

28. Interpretation

29. Insertion of new section:

160AEA. Passive income

30. Credits in respect of foreign tax

31. Certain dividends deemed to be interest income

32. Foreign underlying tax

33. Insertion of new sections:

160AFCA. Foreign tax in respect of amounts assessable under

section 456

160AFCB. Foreign tax in respect of amounts assessable under

section 457

160AFCC. Foreign tax in respect of amounts assessable under

section 458

160AFCD. Foreign tax in respect of amounts exempt under

section 23AI

34. Repeal of section and substitution of new section:

160AFD. Losses of previous years

35. Carry-forward and transfer of excess credits

36. Penalty for false or misleading statements

37. What constitutes a disposal or acquisition

38. Capital gains and capital losses

39. Insertion of new section:

160ZFA. Adjustment where section 47A applies to rolled-over assets

40. Return of capital on investment in trust

41. Transfer of asset from company or trust to spouse upon breakdown of

marriage

42. Transfer of asset between companies in the same group

43. Transfer of asset from subsidiary to holding company for no

consideration

44. Commissioner may collect tax from person owing money to taxpayer

45. Assessment where no administration

46. Penalty for false or misleading statements

47. Interpretation

48. Insertion of new section:

264A. Offshore information notices

49. Insertion of new Part:

PART X - ATTRIBUTION OF INCOME IN RESPECT OF CONTROLLED FOREIGN

COMPANIES

Division 1 - Preliminary

316. Object of Part

317. Interpretation

318. Associates

319. Statutory accounting period of a company

320. Listed countries and unlisted countries

321. Each listed country and each unlisted country to be

treated as a separate foreign country

322. Meaning of `entitled to acquire'

323. State foreign taxes may be treated as federal foreign

taxes

324. When income or profits subject to tax in a listed country

325. When dividends etc. taxed in a listed country at normal

company tax rate

326. AFI subsidiary

327. Eligible finance shares

328. Non-resident family trusts

329. Public unit trusts

330. Tax detriment

331. Company deemed to be treated as a resident of a listed

country or an unlisted country for the purposes of the tax

law of that country

332. Companies that are residents of listed countries

333. Companies that are residents of unlisted countries

334. Member of a non-portfolio company group

335. References extend to pre-commencement matters and things

Division 2 - Types of Entity

Subdivision A - Australian Entities

336. Australian entity

337. Australian partnership

338. Australian trust

Subdivision B - Controlled Foreign Entities (CFEs)

339. Controlled foreign entity (CFE)

340. Controlled foreign company (CFC)

341. Controlled foreign partnership (CFP)

342. Controlled foreign trust (CFT)

Subdivision C - Eligible Transferors in relation to Trusts

343. Interpretation

344. References to transfer of property or services

345. Deemed transfers of property or services

346. Circumstances in which a transfer of property or services

is an eligible business transaction

347. Eligible transferor in relation to a discretionary trust

348. Eligible transferor in relation to a non-discretionary

trust or a public unit trust

Division 3 - Control Interests, Attribution Interests, Attributable

Taxpayers and Attribution Percentages

Subdivision A - Control Interests

349. Associate-inclusive control interest in a company or trust

350. Direct control interest in a company

351. Direct control interest in a trust

352. Indirect control interest in a company or trust

353. Control tracing interest in a company

354. Control tracing interest in a CFP

355. Control tracing interest in a CFT

Subdivision B - Attribution Interests

356. Direct attribution interest in a CFC or CFT

357. Indirect attribution interest in a CFC or CFT

358. Attribution tracing interest in a CFC

359. Attribution tracing interest in a CFP

360. Attribution tracing interest in a CFT

Subdivision C - Attributable Taxpayers and Attribution Percentages

361. Attributable taxpayer in relation to a CFC or a CFT

362. Attribution percentage of an attributable taxpayer

Division 4 - Attribution Accounts

363. Attribution account entity

364. Attribution account percentage

365. Attribution account payment

366. Direct attribution account interest in a company

367. Direct attribution account interest in a partnership

368. Direct attribution account interest in a trust

369. Indirect attribution account interest in an entity

370. Attribution surplus

371. Attribution credit

372. Attribution debit

373. Grossed-up amount of an attribution debit

Division 5 - Attributed Tax Accounts

374. Attributed tax account surplus

375. Attributed tax account credit

376. Attributed tax account debit

Division 6 - Exempting Receipts etc.

377. Exempting receipt of an unlisted country company

378. Exempting profits

379. Exempting profits percentage

380. Exempting receipt of a section 6 resident company

Division 7 - Calculation of Attributable Income of CFC

Subdivision A - Basic Principles

381. Separate attributable income for each attributable

taxpayer

382. Attributable income is taxable income calculated on

certain assumptions

383. Basic assumptions

384. Additional assumption for unlisted country CFC

385. Additional assumption for listed country CFC

386. Adjusted tainted income

387. Reduction of attributable income because of interim

dividends

Subdivision B - General Modifications of Australian Tax Law

388. Double tax agreements to be disregarded

389. Certain provisions to be disregarded in calculating

attributable income

390. Elections to be made by eligible taxpayer

391. Income and expenses to be expressed in Australian currency

392. Notional assessable amounts are to be pre-tax

393. Notional allowable deduction for taxes paid

394. Notional allowable deduction for eligible finance share

dividends

395. Expenditure incurred to produce income or profits in later

statutory accounting periods

396. Modified application of sections 25A and 52

397. Modified application of trading stock provisions

398. Modified application of depreciation provisions

399. Modifications of net income of partnerships and trusts

400. Modified application of Division 13 of Part III

401. Reduction of disposal consideration where attributed

income not distributed

402. Additional notional exempt income - unlisted or listed

country CFC

403. Additional notional exempt income - unlisted country CFC

404. Additional notional exempt income - listed country CFC

Subdivision C - Modifications Relating to Australian Capital Gains

Tax

405. Interpretation

406. Meaning of `30 June 1990 non-taxable Australian asset'

407. Certain provisions of this Subdivision to be treated as

provisions of Part IIIA

408. Part IIIA not to apply to disposals of taxable Australian

assets

409. Losses on disposals before end of 30 June 1990 to be

disregarded

410. Modified application of Part IIIA - general modifications

411. 30 June 1990 non-taxable Australian assets taken to have

been acquired on that date

412. Cost base of 30 June 1990 non-taxable Australian asset

413. Adjustment of cost base as at 30 June 1990 - return of

capital

414. Rights to acquire shares or share options

415. Rights to acquire units or unit options

416. Company-issued options to acquire unissued shares

417. Unit trust-issued options to acquire unissued units

418. Options

419. Modified application of section 160ZZO (transfer of asset

between companies in the same group)

420. Modified application of section 160ZZOA (transfer of asset

from subsidiary to holding company for no consideration)

421. Elections under CGT roll-over provisions

422. Adjustment of disposal consideration where change of

residence by eligible CFC from unlisted to listed country

423. Adjustment of disposal consideration where section 47A

applies to rolled-over assets

Subdivision D - Modifications Relating to Losses

424. Classes of notional assessable income

425. Sometimes-exempt income etc.

426. Creation of loss in relation to a class of notional

assessable income

427. Certain provisions to be disregarded

428. Subdivision to apply as if there were always a requirement

to calculate attributable income

429. Notional allowable deduction for (sometimes-exempt income)

loss of a particular class

430. Limitation on deductions for classes of notional

assessable income

431. Deduction etc. for previous period loss in relation to a

class of notional assessable income

Division 8 - Active Income Test

Subdivision A - Basic Conditions for Passing the Active Income Test

432. Active income test

Subdivision B - Tainted Income Ratio

433. Tainted income ratio

434. Gross turnover

435. Gross tainted turnover

436. Amounts excluded from active income test

Subdivision C - Treatment of Partnership Income

437. Treatment of partnership income

Subdivision D - General Interpretive Provisions

438. Roll-overs - asset disposals

439. When currency exchange gains or losses relate to active

income transactions

440. Asset disposals - revaluations and arm's length amounts

441. Hire-purchase and other property financing transactions

442. Assumption of rights of lender under a loan

443. Net tainted commodity gains

444. Net tainted currency exchange gains

445. Net gains - disposal of tainted assets

Subdivision E - Passive Income, Tainted Sales Income and Tainted

Services Income

446. Passive income

447. Tainted sales income

448. Tainted services income

Subdivision F - Special Rules Relating to AFI Subsidiaries Carrying

On Financial Intermediary Business

449. AFI subsidiaries - interest income

450. AFI subsidiaries - asset disposals and currency

transactions

Subdivision G - Substantiation Requirements

451. Active income test - substantiation requirements for

company

452. Active income test - substantiation requirements for

partnership

453. Active income test - substantiation requirements for

attributable taxpayer

454. Assessment on assumption - retention of accounts etc. and

compliance with information notices

455. Amendment of assessments

Division 9 - Attribution of Attributable Income and Other Amounts

456. Assessability in respect of CFC's attributable income

457. Assessability where CFC changes residence from unlisted

country to listed country or to Australia

458. Assessability in respect of certain dividends paid by a

CFC

459. Assessability in respect of certain dividends deemed to be

paid by a CFC under section 47A

460. Only resident partners, beneficiaries etc. liable to be

assessed as a result of attribution

Division 10 - Post-attribution Asset Disposals

461. Reduction of disposal consideration where attributed

income not distributed

Division 11 - Keeping of Records

462. Keeping of records - section 456

463. Keeping of records - section 458

464. Keeping of records - section 459

465. Offence of failing to keep records

466. Manner in which records required to be kept

467. Circumstances where records not required to be kept –

reasonable excuse etc.

468. Treatment of partnerships

Division 2 - Application and Transitional

50. Interpretation

51. Application of amendments

52. Transitional - section 108 of the amended Act

53. Transitional - section 160AFD of the amended Act

54. Transitional - section 319 of the amended Act

55. Transitional - section 458 of the amended Act

56. Transitional - section 459 of the amended Act

57. Transitional - CFT distributions

58. Transitional - change of CFC residence from unlisted to listed

country

59. Transitional - change of CFC residence from unlisted country to

Australia

60. Transitional - regulations

PART 3 - AMENDMENT OF THE INCOME TAX (INTERNATIONAL AGREEMENTS) ACT

1953

62. Principal Act

63. Interpretation

64. Application of amendments

PART 4 - AMENDMENT OF THE TAXATION ADMINISTRATION ACT 1953

65. Principal Act

66. Interpretation

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991 - LONG TITLE

An Act to amend the law relating to taxation

PART 1 - PRELIMINARY

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 1

Short title [see Note 1]

1. This Act may be cited as the Taxation Laws Amendment (Foreign Income) Act

1990.

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 2

Commencement [see Note 1]

2. This Act commences on the day on which it receives the Royal Assent.

PART 2 - AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Division 1 - Amendments

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 3

Principal Act

3. In this Division, "Principal Act" means the Income Tax Assessment Act

1936*1*.

*1* No. 27, 1936, as amended. For previous amendments, see No. 88, 1936; No.

5, 1937; No. 46, 1938; No. 30, 1939; Nos. 17 and 65, 1940; Nos. 58 and 69,

1941; Nos. 22 and 50, 1942; No. 10, 1943; Nos. 3 and 28, 1944; Nos. 4 and 37,

1945; No. 6, 1946; Nos. 11 and 63, 1947; No. 44, 1948; No. 66, 1949; No. 48,

1950; No. 44, 1951; Nos. 4, 28 and 90, 1952; Nos. 1, 28, 45 and 81, 1953; No.

43, 1954; Nos. 18 and 62, 1955; Nos. 25, 30 and 101, 1956; Nos. 39 and 65,

1957; No. 55, 1958; Nos. 12, 70 and 85, 1959; Nos. 17, 18, 58 and 108, 1960;

Nos. 17, 27 and 94, 1961; Nos. 39 and 98, 1962; Nos. 34 and 69, 1963; Nos. 46,

68, 110 and 115, 1964; Nos. 33, 103 and 143, 1965; Nos. 50 and 83, 1966; Nos.

19, 38, 76 and 85, 1967; Nos. 4, 70, 87 and 148; 1968; Nos. 18, 93 and 101,

1969; No. 87, 1970; Nos. 6, 54 and 93, 1971; Nos. 5, 46, 47, 65 and 85, 1972;

Nos. 51, 52, 53, 164 and 165, 1973; No. 216, 1973 (as amended by No. 20,

1974); Nos. 26 and 126, 1974; Nos. 80 and 117, 1975; Nos. 50, 53, 56, 98, 143,

165 and 205, 1976; Nos. 57, 126 and 127, 1977; Nos. 36, 57, 87, 90, 123, 171

and 172, 1978; Nos. 12, 19, 27, 43, 62, 146, 147 and 149, 1979; Nos. 19, 24,

57, 58, 124, 133, 134 and 159, 1980; Nos. 61, 92, 108, 109, 110, 111, 154 and

175, 1981; Nos. 29, 38, 39, 76, 80, 106 and 123, 1982; Nos. 14, 25, 39, 49,

51, 54 and 103, 1983; Nos. 14, 42, 47, 63, 76, 115, 124, 165 and 174, 1984;

No. 123, 1984 (as amended by No. 65, 1985); Nos. 47, 49, 104, 123, 168 and

174, 1985; No. 173, 1985 (as amended by No. 49, 1986); Nos. 41, 46, 48, 51,

109, 112 and 154, 1986; No. 49, 1986 (as amended by No. 141, 1987); No. 52,

1986 (as amended by No. 141, 1987); No. 90, 1986 (as amended by No. 141,

1987); Nos. 23, 58, 61, 120, 145 and 163, 1987; No. 62, 1987 (as amended by

No. 108, 1987); No. 108, 1987 (as amended by No. 138, 1987); No. 138, 1987 (as

amended by No. 11, 1988); No. 139, 1987 (as amended by Nos. 11 and 78, 1988);

Nos. 8, 11, 59, 75, 78, 80, 87, 95, 97, 127 and 153, 1988; Nos. 2, 11, 56, 70,

73, 97, 105, 107, 129, 163 and 167, 1989; No. 97, 1989 (as amended by No. 105,

1989); and Nos. 20, 35, 37, 45, 57, 58, 60 and 61, 1990.

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 4

Interpretation

4. Section 6 of the Principal Act is amended:

(a) by omitting "or" from the end of paragraph (a) of the definition of

"assessment" in subsection (1);

(b) by inserting after paragraph (a) of the definition of "assessment" in

subsection (1) the following paragraph:

"(aa) the ascertainment of the amount of interest

payable under section 102AAM; or".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 5

Foreign income and foreign tax

5. Section 6AB of the Principal Act is amended:

(a) by adding at the end of subsection (1) ", and includes a reference to

an amount included in assessable income under section 102AAZD, 456, 457, 458

or 459.";

(b) by omitting subsection (2) and substituting the following subsection:

"(2) A reference in this Act to foreign tax is a reference to:

(a) tax imposed by a law of a foreign country, being:

(i) tax upon income; or

(ii) tax upon profits or gains, whether of an income or capital nature; or

(iii) tax deemed by section 160AFC to have been paid in respect of a

dividend; or

(iv) any other tax, being a tax that is subject to an agreement having the

force of law under the Income Tax (International Agreements) Act 1953;

but does not include a unitary tax or a credit absorption tax; or

(b) any of the following:

(i) tax that is taken, because of section 160AFCA, to have been paid in

respect of an amount included in assessable income under section 456;

(ii) tax that is taken, because of section 160AFCB, to have been paid in

respect of an amount included in assessable income under section 457;

(iii) tax that is taken, because of section 160AFCC, to have been paid in

respect of an amount included in assessable income under section 458;

(iv) tax that is taken, because of section 160AFCD, to have been paid in

respect of the section 23AI exempt part of an attribution account payment

(within the meaning of section 160AFCD).";

"(3A) Except as provided by section 160AFCA, 160AFCB, 160AFCC or 160AFCD, a

taxpayer is not taken to have been personally liable for, and to have paid,

foreign tax in respect of:

(a) an amount included in assessable income under

section 102AAZD, 456, 457, 458 or 459; or

(b) the section 23AI exempt part of an attribution

account payment (within the meaning of section 160AFCD).".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 6

Grossing-up of foreign income

6. Section 6AC of the Principal Act is amended by adding at the end the

following subsections:

"(3) Where a taxpayer is, because of section 160AFCA, taken to have paid an

amount of foreign tax in respect of an amount included in the assessable

income of the taxpayer under section 456 (in this subsection called the

`section 456 amount'), the section 456 amount is taken, for the purposes of

this Act (other than sections 160AFCA and 371) to be increased by the amount

of that tax.

"(4) Where a taxpayer is, because of section 160AFCB, taken to have paid an

amount of foreign tax in respect of an amount included in the assessable

income of the taxpayer under section 457 (in this subsection called the

`section 457 amount'), the section 457 amount is taken, for the purposes of

this Act (other than sections 160AFCB and 371) to be increased by the amount

of that tax.

"(5) Where a taxpayer is, because of section 160AFCC, taken to have paid an

amount of foreign tax in respect of an amount included in the assessable

income of the taxpayer under section 458 (in this subsection called the

`section 458 amount'), the section 458 amount is taken, for the purposes of

this Act (other than sections 160AFCC and 371) to be increased by the amount

of that tax.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 7

Income beneficially derived

7. Section 6B of the Principal Act is amended:

(a) by inserting after subsection (1) the following subsection:

"(1A) For the purposes of this Act, an amount of

income derived by a person, being income other than passive income, is to be

taken to be income attributable to passive income:

(a) if the person derived the amount of income by

reason of being beneficially entitled to an amount representing passive

income; or

(b) if the person derived the amount of income as

a beneficiary in a trust estate and the amount of income can be attributed,

directly or indirectly, to passive income or to an amount that is taken, by

any application or successive applications of this subsection, to be an amount

of income attributable to passive income.";

(b) by omitting paragraph (2A) (b) and substituting the following

paragraph:

"(b) if the income so derived is, by virtue of

subsection (1), (1A) or (2), attributable to a dividend, passive income or

interest income derived from that source.";

"(2AA) In subsections (1A) and (2A), `passive

income' has the same meaning as in section 160AEA.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 8

8. After section 23AG of the Principal Act the following sections are

inserted:

Exemption of foreign branch profits of Australian companies

"23AH. (1) For the purposes of subsections (2) and (3), if the following

conditions are satisfied in relation to foreign income derived by a taxpayer:

(a) the foreign income is derived by the taxpayer during the year of income

commencing on 1 July 1990 or a subsequent year of income;

(b) the foreign income is derived in carrying on a business in a listed

country at or through a permanent establishment of the taxpayer in the listed

country;

relation to any listed country in relation to the year of income;

(d) the foreign income is subject to tax in any listed country in a tax

accounting period:

(i) ending before the end of the year of income; or

(ii) commencing during the year of income; then:

(e) the foreign income is foreign branch income; and

(f) the taxpayer is the original taxpayer in relation to the foreign branch

income.

"(2) If the original taxpayer in relation to the foreign branch income is a

company, the assessable income of the company does not include so much of the

foreign branch income as is attributable to a period when the company was a

resident. "(3) If:

(a) the original taxpayer in relation to the foreign branch income is the

trustee of a trust estate or a partnership; and

(b) the following conditions are satisfied in relation to another taxpayer

(in this subsection called the `actual taxpayer'):

(i) the actual taxpayer is a company;

(ii) apart from this subsection, an amount is included in the assessable

income of the actual taxpayer of a year of income (in this subsection called

the `current year of income') under subsection 92 (1) or section 97, 98A or

100;

(iii) the whole or a part of the amount so included in the actual

taxpayer's assessable income (which whole or part is in this subsection called

the `taxpayer's portion of the foreign branch income') is attributable (either

directly or indirectly through one or more interposed trusts or partnerships)

to the foreign branch income;

the assessable income of the actual taxpayer of the current year of income

does not include so much of the taxpayer's portion of the foreign branch

income as is attributable to a period when the actual taxpayer was a

resident.

"(4) Subsections (2) and (3) of this section are to be disregarded in

applying subsection 160ZA (4).

"(5) For the purposes of subsection (1), where a taxpayer disposes, either

in whole or in part, of a business carried on in a listed country at or

through a permanent establishment of the taxpayer in the listed country, any

foreign income derived in the course of that disposal is taken to have been

derived in carrying on that business.

"(6) For the purposes of subsections (8) and (9), if the following

conditions are satisfied in relation to the disposal of an asset by a

taxpayer:

(a) the asset is disposed of during:

(i) the year of income commencing on 1 July 1990 (in this subsection called

the `disposal year of income'); or

(ii) a subsequent year of income (in this subsection also called the

`disposal year of income');

(b) the asset consists of:

(i) a unit of property for which depreciation is, or would apart from this

section be, allowable to the taxpayer under section 54 in respect of any year

of income; or

(ii) a building; or

(iii) land;

purpose of producing foreign income from carrying on a business in a listed

country at or through a permanent establishment of the taxpayer in the listed

country;

(d) the asset is not a taxable Australian asset of the taxpayer;

(e) a gain or profit of a capital nature accrues to the taxpayer in respect

of the disposal of the asset;

(f) that gain or profit is not eligible designated concession income in

relation to any listed country in relation to the disposal year of income;

(g) that gain or profit is subject to tax in any listed country in a tax

accounting period:

(i) ending before the end of the disposal year of income; or

(ii) commencing during the disposal year of income; then:

(h) that gain or profit is a foreign branch capital gain; and

(j) the taxpayer is the original taxpayer in relation to the foreign branch

capital gain.

"(7) For the purposes of subsections (8) and (9), if the following

conditions are satisfied in relation to the disposal of an asset of a taxpayer

(in this subsection called the `taxpayer's asset'):

(a) the taxpayer's asset is disposed of during:

(i) the year of income of the taxpayer commencing on1 July 1990 (in this

subsection called the `disposal year of income'); or

(ii) a subsequent year of income of the taxpayer (in this subsection also

called the `disposal year of income');

(b) the taxpayer's asset consists of the taxpayer's interest in any of the

following partnership assets of a partnership in which the taxpayer is a

partner:

(i) a unit of property for which depreciation is, or would apart from this

section be, allowable to the partnership under section 54 in respect of any

year of income;

(ii) a building;

(iii) land;

for the purpose of producing foreign income from carrying on a business in a

listed country at or through a permanent establishment of the partnership in

the listed country;

(d) the taxpayer's asset is not a taxable Australian asset of the

taxpayer;

(e) a gain or profit of a capital nature accrues to the taxpayer in respect

of the disposal of the taxpayer's asset;

(f) that gain or profit is not eligible designated concession income in

relation to any listed country in relation to the disposal year of income;

(g) that gain or profit is subject to tax in any listed country in a tax

accounting period:

(i) ending before the end of the disposal year of income; or

(ii) commencing during the disposal year of income; then:

(h) that gain or profit is a foreign branch capital gain;

(j) the taxpayer is the original taxpayer in relation to the foreign branch

capital gain.

"(8) If the original taxpayer in relation to the foreign branch capital gain

is a company, no capital gain accrues to the company under Part IIIA in

respect of the disposal of the asset.

"(9) If:

(a) the original taxpayer in relation to the foreign branch capital gain is

the trustee of a trust estate; and

(b) the following conditions are satisfied in relation to another taxpayer

(in this subsection called the `actual taxpayer'):

(i) the actual taxpayer is a company;

(ii) apart from this subsection, an amount is included in the assessable

income of the actual taxpayer of a year of income (in this subsection called

the `current year of income') under subsection 92 (1) or section 97, 98A or

100;

(iii) the whole or a part of the amount so included in the actual

taxpayer's assessable income (which whole or part is in this subsection called

the `taxpayer's portion of the foreign branch capital gain') is attributable

(either directly or indirectly through one or more interposed trusts or

partnerships) to the foreign branch capital gain;

the assessable income of the actual taxpayer of the current year of income

does not include so much of the taxpayer's portion of the foreign branch

capital gain as is attributable to a period when the actual taxpayer was a

resident.

"(10) Unless the contrary intention appears, an expression used in

subsections (6), (7) and (8) and in Part IIIA has the same meaning in those

subsections as it has in that Part.

"(11) Subsection 324 (2) applies in relation to this section in a

corresponding way to the way in which it applies in relation to Part X.

"(12) In this section:

`company' has the same meaning as in Part X;

`double tax agreement' has the same meaning as in Part X;

`eligible designated concession income' has the same meaning as in`foreign

income' includes an amount that:

(a) apart from this section, would be included in assessable income under a

provision of this Act other than Part IIIA; and

(b) is derived from sources in a foreign country;

`listed country' has the same meaning as in Part X;

`permanent establishment', in relation to a listed country:

(a) if there is a double tax agreement in relation to the listed country -

has the same meaning as in the double tax agreement; or

(b) in any other case - has the meaning given by subsection 6 (1);

`subject to tax' has the same meaning as in Part X;

`tax accounting period' has the same meaning as in Part X.

Exemption of amounts paid out of attributed income

"23AI. (1) Where:

(a) either:

(i) an attribution account payment of a kind

referred to in paragraph 365 (1) (a), (b), (c) or (e) is made to a taxpayer

(other than a partnership or taxpayer in the capacity of trustee of a trust);

(ii) an attribution account payment of a kind

referred to in paragraph 365 (1) (d) is made to a taxpayer; and

(b) on the making of the payment, an attribution debit arises, for the

entity making the payment, in relation to the taxpayer;

the following provisions have effect:

payment is exempt from tax to the extent of the debit;

(d) if the payment is of a kind referred to in paragraph 365 (1) (b) and,

apart from this section, an amount would be included in the taxpayer's

assessable income under section 92 in respect of an individual interest in the

net income of the partnership of the year of income referred to in that

paragraph - that amount is not so included, to the extent of the debit;

(e) if the payment is of a kind referred to in paragraph 365 (1) (c) and,

apart from this section, an amount would:

(i) be included in the taxpayer's assessable

income under section 97, 98A or 100; or

(ii) be assessable to the trustee of the trust

referred to in that paragraph under section 98;

in respect of a share of the net income of the trust

of the year of income referred to in that paragraph - that amount is not so

included, or not so assessable, to the extent of the debit;

(f) if the payment is of a kind referred to in paragraph 365 (l) (d) - the

payment is not, to the extent of the debit, assessable to the taxpayer as

mentioned in that paragraph;

(g) if the payment is of a kind referred to in paragraph 365 (1) (e) and,

apart from this section, an amount would be included in the taxpayer's

assessable income, of the year of income referred to in that paragraph, under

section 99B in respect of the trust property referred to in that paragraph -

that amount is not so included to the extent of the debit.

"(2) This section is to be disregarded for the purposes of applying:

(a) the definition of `foreign income deduction' in sections 79D and

160AFD; and

(b) any other provision of this Act to determine allowable deductions.

"(3) In this section: `attribution account payment' has the same meaning as

in Part X;

`attribution debit' has the same meaning as in Part X;

`company' has the same meaning as in Part X;

`trust' has the same meaning as in Part X.

Exemption of certain non-portfolio dividends from foreign countries

"23AJ. (1) Where:

(a) a non-portfolio dividend is paid to a taxpayer by a company that is a

resident of a listed or an unlisted country; and

(b) the taxpayer is a company that is a resident within the meaning of

section 6;

then the dividend is exempt from income tax to the extent that it is an

exempting receipt of the taxpayer.

"(2) In this section:

`company' has the same meaning as in Part X;

`exempting receipt' has the same meaning as in Part X;

`non-portfolio dividend' has the same meaning as in Part X;

`resident of a listed country' has the same meaning as in Part X;

`resident of an unlisted country' has the same meaning as in Part X.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 9

9. After section 47 of the Principal Act the following section is inserted:

Distribution benefits - CFCs

"47A. (1) Subject to subsection (2), if:

(a) a company (in this section called the `first company') has profits

immediately before a distribution time for a distribution benefit in relation

to the first company; and

(b) the distribution time occurred after 3 June 1990; and

(d) the first company is a resident of an unlisted country at the

distribution time;

so much of the distribution payment in relation to the distribution time as

would not otherwise be a dividend and does not exceed the amount of those

profits is taken, for the purposes of this Act, to be a dividend paid by the

first company:

(e) to the recipient of the benefit as a shareholder in the first company;

and

(f) out of profits derived by the first company; and

(g) at the distribution time.

"(2) If:

(a) either of the following subparagraphs applies:

(i) by virtue of subsection (1), the whole or a part of the distribution

payment is included in the assessable income of a taxpayer of the year of

income in which the distribution time occurred under section 44;

(ii) by virtue of subsection (1), an amount is included in the assessable

income of a taxpayer of a year of income under section 458 in respect of the

distribution payment; and

(b) the taxpayer's return of income for the year of income was not prepared

on the basis that the distribution payment had the consequence specified in

subsection (1);

that subsection has effect in relation to the taxpayer and in relation to that

distribution payment as if the reference in that subsection to the purposes of

this Act were a reference to the purposes of this Act (other than Division 18,

section 365 and Division 6 of Part X).

"(3) Subject to subsections (9) and (12), a reference in this section to a

distribution benefit in relation to the first company is a reference to an

eligible benefit where the following conditions are satisfied:

(a) the eligible benefit was provided to:

(i) an associated entity in relation to the first company; or

(ii) another entity that, immediately after the time of the provision of

the eligible benefit, was an associated entity in relation to the first

company;

(b) the eligible benefit was provided by:

(i) the first company; or

(ii) an entity (in this subsection called the `arranger') other than the

first company under an arrangement between:

(A) the first company; and

(B) the arranger or another entity;

into an undertaking to make, one or more transfers of property or services to

the arranger or to another entity (which transfers are in this section called

the `arrangement transfers') that are attributable, in whole or in part, to

the provision of the eligible benefit.

"(4) Where the first company entered into an undertaking to make one or more

arrangement transfers, the time of the arrangement transfers is the time the

undertaking was entered into.

"(5) Where, at a particular time, an entity (in this subsection called the

`provider') waives or releases the obligation of another entity (in this

subsection called the `recipient') to pay or repay to the provider an amount:

(a) the waiver or release is taken to constitute an eligible benefit

provided at that time by the provider to the recipient; and

(b) if the eligible benefit is a distribution benefit in relation to the

first company - each of the following times is a distribution time for the

eligible benefit:

(i) if the eligible benefit was provided by the first company - the time of

the provision of the eligible benefit; or

(ii) in any other case - the time, or each of the times, of the arrangement

transfers concerned;

first company - the distribution payment in relation to the distribution time

is:

(i) if the benefit was provided by the first company - the amount the

payment or repayment of which is waived or released; or

(ii) in any other case - so much of the amount or market value of the

arrangement transfer as is attributable to the provision of the eligible

benefit.

"(6) For the purposes of subsection (5), an entity is taken to be under an

obligation to pay or repay an amount even if the amount is not due for payment

or repayment.

"(7) Where, at a particular time, an entity (in this subsection called the

`provider') makes a loan to another entity (in this subsection called the

`recipient'), where:

(a) the parties to the loan are not at arm's length with each other in

relation to the loan; or

(b) the purpose, or one of the purposes, of the making of the loan was to

facilitate, directly or indirectly (through one or more interposed companies,

partnerships or trusts), the payment of a dividend that is, or would be:

(i) exempt from tax under section 23AJ (in whole or in part); or

(ii) an exempting receipt for the purposes of section 377; or

facilitate, directly or indirectly, the provision of an eligible benefit by

the recipient, being an eligible benefit that is a distribution benefit in

relation to any company;

the following provisions have effect:

(d) the making of the loan is taken to constitute an eligible benefit

provided by the provider to the recipient at that time;

(e) if the eligible benefit is a distribution benefit in relation to the

first company - each of the following times is a distribution time for the

eligible benefit:

(i) if the benefit was provided by the first company - the time of the

provision of the benefit; or

(ii) in any other case - the time, or each of the times, of the arrangement

transfers concerned;

(f) if the eligible benefit is a distribution benefit in relation to the

first company - the distribution payment in relation to the distribution time

is:

(i) if the benefit was provided by the first company - the amount of the

loan; or

(ii) in any other case - so much of the amount or market value of the

arrangement transfer as is attributable to the provision of the eligible

benefit.

"(8) Where, at a particular time:

(a) an entity (in this subsection called the `provider') acquires from a

company (in this subsection called the `recipient'):

(i) a share in the recipient;

(ii) a right to acquire a share in the recipient;

(iii) an option to acquire a share in the recipient; or

(b) an entity (in this subsection also called the `provider') acquires from

the trustee of a unit trust (in this subsection also called the `recipient'):

(i) a unit in the recipient;

(ii) a right to acquire a unit in the recipient;

(iii) an option to acquire a unit in the recipient;

the following provisions have effect:

the provider to the recipient at that time;

(d) if the eligible benefit is a distribution benefit in relation to the

first company - each of the following is a distribution time for the eligible

benefit:

(i) if the benefit was provided by the first company - the time of the

provision of the benefit; or

(ii) in any other case - the time, or each of the times, of the arrangement

transfers concerned;

(e) if the eligible benefit is a distribution benefit in relation to the

first company - the distribution payment in relation to the distribution time

is:

(i) if the benefit was provided by the first company - the amount or market

value of the consideration paid or given by the first company in respect of

the acquisition; or

(ii) in any other case - so much of the amount or market value of the

arrangement transfer as is attributable to the provision of the eligible

benefit;

(f) if:

(i) the eligible benefit is a distribution benefit in relation to the first

company; and

(ii) the provider transferred property or services to the recipient in

respect of the acquisition;

in determining the profits of the company immediately before the distribution

time, or the first distribution time, as the case requires, for the

distribution benefit, the following assumptions are to be made:

(iii) if the benefit was provided by the first company - the assumption

that, immediately before the distribution time, the company had:

(A) disposed of the property or services to an entity other than the

recipient; and

(B) received, in respect of that disposal, consideration equal to the

market value of the property or services;

(iv) if subparagraph (iii) does not apply - the assumption that,

immediately before the distribution time, the company had:

(A) disposed of equivalent property or services to an entity other than the

recipient or the entity who provided the eligible benefit; and

(B) received, in respect of that disposal, consideration equal to the

market value of the property or services.

"(9) An eligible benefit that is covered by subsection (8) and provided at a

particular time is not a distribution benefit in relation to the first company

if, at that time, there is no entity who is:

(a) either:

(i) the holder of an eligible equity interest in the first company; or

(ii) an associate of an entity who is the holder of an eligible equity

interest in the first company; and

(b) the holder of an eligible equity interest in the recipient referred to

in that subsection.

"(10) Where:

(a) an entity (in this subsection called the `provider') transfers property

or services to another entity (in this subsection called the `recipient');

and

(b) the property or services are transferred:

(i) for no consideration; or

(ii) for a consideration less than the market value of the property or

services; and

the making of a loan; and

(d) in any case - the property or services are not transferred by way of

consideration for the acquisition from a company of:

(i) a share in the company; or

(ii) a right to acquire a share in the company; or

(iii) an option to acquire a share in the company; and

(e) in any case - the property or services are not transferred in respect

of the acquisition from the trustee of a unit trust of:

(i) a unit in the unit trust; or

(ii) a right to acquire a unit in the unit trust; or

(iii) an option to acquire a unit in the unit trust; and

(f) in the case of a transfer of property - the property does not consist

of a payment in respect of a call on a share in a company;

the following provisions have effect:

(g) the transfer is taken to constitute an eligible benefit provided by the

provider to the recipient at that time;

(h) if the eligible benefit is a distribution benefit in relation to the

first company - each of the following is a distribution time for the eligible

benefit:

(i) if the benefit was provided by the first company - the time of the

provision of the benefit; or

(ii) in any other case - the time, or each of the times, of the arrangement

transfers concerned;

(j) if the eligible benefit is a distribution benefit in relation to the

first company - the distribution payment in relation to the distribution time

is:

(i) if the benefit was provided by the first company - the amount by which

the amount or market value of the property or services exceeds the

consideration (including nil consideration) mentioned in paragraph (b); or

(ii) if subparagraph (i) does not apply and there is only one arrangement

transfer - the amount by which so much of the amount or market value of the

arrangement transfer as is attributable to the provision of the eligible

benefit exceeds the consideration (including nil consideration) mentioned in

paragraph (b); or

(iii) if subparagraph (i) does not apply and there are 2 or more

arrangement transfers - the amount worked out in relation to the arrangement

transfer using the following formula:

Total Excess X Arrangement transfer

Total arrangement transfers

where:

`Total Excess' means the amount by which so much of the total amount or market

value of all of the arrangement transfers as is attributable to the provision

of theeligible benefit exceeds the consideration (including nil consideration)

mentioned in paragraph (b);

`Arrangement transfer' means the amount or market value of the arrangement

transfer concerned;

`Total arrangement transfers' means the total amount or market value of all of

the arrangement transfers;

(k) if the eligible benefit is a distribution benefit in relation to the

first company - in determining the profits of the company immediately before a

distribution time for the distribution benefit, the following assumptions are

to be made:

(i) if the benefit was provided by the first company - the assumption that,

immediately before the distribution time, the company had:

(A) disposed of the property or services to an entity other than the

recipient; and

(B) received, in respect of that disposal, consideration equal to the

market value of the property or services;

(ii) if subparagraph (i) does not apply and there is only one arrangement

transfer - the assumption that, immediately before the distribution time, the

company had:

(A) disposed of the property or services covered by the arrangement

transfer to an entity other than the entity who provided the eligible benefit;

and

(B) received, in respect of that disposal, consideration equal to the

market value of the property or services;

(iii) if subparagraph (i) does not apply and there are 2 or more

arrangement transfers - the assumption that, immediately before each

distribution time, the company had:

(A) disposed of the property or services covered by the arrangement

transfer concerned to an entity other than the entity who provided the

eligible benefit; and

(B) received, in respect of that disposal, consideration equal to the

market value of the property or services.

"(11) Where, at a particular time, an entity (in this subsection called the

`provider') makes a payment to another entity, being a company (in this

subsection called the `recipient'), in respect of a call on a share in the

recipient:

(a) the making of the payment is taken to constitute an eligible benefit

provided by the provider to the recipient at that time; and

(b) if the eligible benefit is a distribution benefit in relation to the

first company - each of the following is a distribution time for the eligible

benefit:

(i) if the benefit was provided by the first company - the time of the

provision of the benefit; or

(ii) in any other case - the time, or each of the times, of the arrangement

transfers concerned;

first company - the distribution payment in relation to the distribution time

is:

(i) if the benefit was provided by the first company - the amount of the

payment; or

(ii) in any other case - so much of the amount or market value of the

arrangement transfer as is attributable to the provision of the eligible

benefit.

"(12) An eligible benefit that is covered by subsection (11) and provided at

a particular time is not a distribution benefit in relation to the first

company if, at that time, there is no entity who is:

(a) either:

(i) the holder of an eligible equity interest in the first company; or

(ii) an associate of an entity who is the holder of an eligible equity

interest in the first company; and

(b) the holder of an eligible equity interest in the recipient referred to

in that subsection.

"(13) If:

(a) apart from this subsection, a particular eligible benefit that is

covered by subsection (8) or (11) and provided at a particular time is not a

distribution benefit in relation to the first company only because of

subsection (9) or (12); and

(b) at a later time, there is an entity who is:

(i) either:

(A) the holder of an eligible equity interest in the first company; or

(B) an associate of an entity who is the holder of an eligible equity

interest in the first company; and

(ii) the holder of an eligible equity interest in the recipient referred to

in whichever of subsections (8) and (11) is applicable;

the following provisions have effect:

requires, had never applied in relation to that eligible benefit;

(d) section 170 does not prevent the amendment of an assessment at any time

for the purposes of giving effect to this subsection.

"(14) If:

(a) apart from this subsection, a particular eligible benefit (in this

subsection called the `first eligible benefit') that is covered by subsection

(8) or (11) and provided at a particular time is not a distribution benefit in

relation to the first company only because of subsection (9) or (12); and

(b) the recipient referred to in whichever of subsections (8) and (11) is

applicable provides an eligible benefit (in this subsection called the `second

eligible benefit') to:

(i) the first company; or

(ii) the provider referred to in whichever of those subsections is

applicable; or

(iii) an associated entity in relation to:

(A) the first company; or

(B) that provider; and

indirectly, the provision of the second eligible benefit;

the following provisions have effect:

(d) this section has effect as if subsection (9) or (12), as the case

requires, had never applied in relation to the first eligible benefit;

(e) section 170 does not prevent the amendment of an assessment at any time

for the purposes of giving effect to this subsection.

"(15) In determining whether a company has profits at a particular time, it

is to be assumed that the accounts of the company had been drawn up

immediately before that time.

"(16) For the purposes of this section, where:

(a) the first company has profits (in this subsection called the `original

profits') immediately before a distribution time for a distribution benefit in

relation to the first company; and

(b) by virtue of subsection (1), an amount (in this subsection called the

`original assessable amount') is included in the assessable income of a

taxpayer (in this subsection called the `original taxpayer') of a year of

income (in this subsection called the `original year of income') under section

44, 458 or 459 in respect of the distribution payment in relation to the

distribution time; and

(i) the original taxpayer is:

(A) a resident at any time during the original year of income; and

(B) a company or a natural person (other than a company or a natural person

in the capacity of a trustee);

(ii) the original taxpayer is the trustee of a corporate unit trust in

relation to the original year of income;

(iii) the original taxpayer is the trustee of a public trading trust in

relation to the original year of income;

(iv) the original taxpayer is the trustee of an eligible entity (within the

meaning of Part IX) in relation to the original year of income;

(v) the original taxpayer is the trustee of a resident trust estate (within

the meaning of Division 6) in relation to the year of income who is liable to

be assessed and pay tax under section 99 or 99A in respect of a part of the

net income of the trust estate;

then, in determining the profits that the first company has at a later time,

no account is to be taken of so much of the original profits as is equal to

the original assessable amount.

"(17) For the purposes of this section, where:

(a) the first company has profits (in this subsection called the `original

profits') immediately before a distribution time for a distribution benefit in

relation to the first company; and

(b) by virtue of subsection (1), an amount (in this subsection called the

`original assessable amount') is included in the assessable income of a

taxpayer (in this subsection called the `original taxpayer') of a year of

income (in this subsection called the `original year of income') under section

44, 458 or 459 in respect of the distribution payment in relation to the

distribution time; and

(i) the original taxpayer is the trustee of a trust estate who is liable to

be assessed and pay tax under section 98 in respect of a share in the net

income of the trust estate of the original year of income;

(ii) the beneficiary who was entitled to that share was a resident at any

time during the original year of income;

(iii) the whole or a part (which whole or part is in this subsection called

the `beneficiary's portion of the original assessable amount') of the share of

the net income is attributable to the original assessable amount;

then, in determining the profits that the first company has at a later time,

no account is to be taken of so much of the original profits as is equal to

the beneficiary's portion of the original assessable amount.

"(18) For the purposes of this section, where:

(a) the first company has profits (in this subsection called the `original

profits') immediately before a distribution time for a distribution benefit in

relation to the first company; and

(b) by virtue of subsection (1), an amount (in this subsection called the

`original assessable amount') is included in the assessable income of a

taxpayer (in this subsection called the `original taxpayer') of a year of

income (in this subsection called the `original year of income') under section

44, 458 or 459 in respect of the distribution payment in relation to the

distribution time; and

partnership; and

(d) the following conditions are satisfied in relation to another taxpayer

(in this subsection called the `actual taxpayer'):

(i) an amount is included in the assessable income of the actual taxpayer

of a year of income (in this subsection called the `assessment year of

income') under subsection 92 (1) or section 97 or 100;

(ii) the actual taxpayer is:

(A) a resident at any time during the assessment year of income, being a

company or a natural person (other than a company or a natural person in the

capacity of a trustee); or

(B) the trustee of a corporate unit trust in relation to the assessment

year of income; or

(D) the trustee of an eligible entity (within the meaning of Part IX) in

relation to the assessment year of income; or

(E) the trustee of a trust estate who is liable to be assessed and pay tax

under section 98 in respect of a share in the net income of a trust estate;

(F) the trustee of a trust estate who is liable to be assessed and pay tax

under section 99 or 99A in respect of a part of the net income of a trust

estate;

(iii) if sub-subparagraph (ii) (A), (B), (C) or (D) applies - the whole or

a part of the amount so included in the actual taxpayer's assessable income

(which whole or part is in this subsection called the `actual taxpayer's

portion of the original assessable amount') is attributable (either directly

or indirectly through one or more interposed partnerships or trusts) to the

original assessable amount;

(iv) if sub-subparagraph (ii) (E) applies:

(A) the beneficiary who was entitled to the share concerned was a resident

at any time during the assessment year of income; and

(B) the whole or a part (which whole or part is in this subsection also

called the `actual taxpayer's portion of the original assessable amount') of

the share of the net income is attributable (either directly or indirectly

through one or more interposed partnerships or trusts) to the original

assessable amount;

(v) if sub-subparagraph (ii) (F) applies:

(A) the trust estate was a resident trust estate (within the meaning of

Division 6) in relation to the assessment year of income; and

(B) the whole or a part (which whole or part is in this subsection also

called the `actual taxpayer's portion of the original assessable amount') of

the part of the net income is attributable (either directly or indirectly

through one or more interposed partnerships or trusts) to the original

assessable amount;

then, in determining the profits that the first company has at a later time,

no account is to be taken of so much of the original profits as is equal to

the actual taxpayer's portion of the original assessable amount.

"(19) The provisions of section 102AAJ apply for the purposes of this

section in like manner as they apply for the purposes of Division 6AAA.

"(20) For the purposes of this section, the question whether a company is a

resident of an unlisted country is to be determined in the same manner in

which that question is determined for the purposes of Part X.

"(21) In this section:

`arrangement' means:

(a) any agreement, arrangement, understanding, promise or undertaking,

whether express 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 there are 2 or more parties or only one party involved;

`associate' has the same meaning as in Part X;

`associated entity', in relation to a company, means either of the following

entities:

(a) a shareholder in the company;

(b) an entity who is an associate of a shareholder in the company;

`CFC' has the same meaning as in Part X;

`distribution benefit' has the meaning given by subsection (3) of this

section;

`eligible equity interest':

(a) in relation to a company, means any of the following:

(i) a share, or an interest in a share, in the company;

(ii) a right to acquire a share, or an interest in a share, in the

company;

(iii) an option to acquire a share, or an interest in a share, in the

company; or

(b) in relation to a unit trust, means any of the following:

(i) a unit, or an interest in a unit, in the unit trust;

(ii) a right to acquire a unit, or an interest in a unit, in the unit

trust;

(iii) an option to acquire a unit, or an interest in a unit, in the unit

trust; or `entity' has the same meaning as in Part X;

`loan' includes:

(a) an advance of money; and

(b) the provision of credit or any other form of financial accommodation;

and

request of an entity where there is an obligation (whether expressed or

implied) to repay the amount; and

(d) a transaction (whatever its terms or form) which in substance effects a

loan of money;

`property' has the same meaning as in Division 6AAA;

`services' has the same meaning as in Division 6AAA;

`statutory accounting period' has the same meaning as in Part X;

`transfer' has the same meaning as in Division 6AAA.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 10

10. Section 79D of the Principal Act is repealed and the following section

is substituted:

Limitation on deductions for foreign income

"79D. (1) Where:

(a) apart from this section, there are one or more foreign income

deductions of a taxpayer in relation to a class of assessable foreign income

in relation to a year of income; and

(b) either:

(i) the taxpayer did not derive any assessable

foreign income of that class in the year of income; or

(ii) the taxpayer derived assessable foreign

income of that class in the year of income and its amount is exceeded by the

sum of the foreign income deductions; then, for the purposes of this Act,

those deductions are reduced respectively:

(d) where subparagraph (b) (ii) applies - by amounts proportionate to those

deductions and equal in total to the amount of the excess referred to in that

subparagraph.

"(2) In this section:

`assessable foreign income' has the same meaning as in section 160AFD;

`class of assessable foreign income' has the same meaning as in section

160AFD;

`foreign income deduction' has the same meaning as in section 160AFD.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 11

General domestic losses of post-1989 years of income

11. Section 79E of the Principal Act is amended:

(a) by inserting in subsections (5) and (6) "assessable" before "foreign"

(wherever occurring);

(b) by omitting from subsection (12) the definitions of "class of income"

and "foreign source";

" `assessable foreign income' has the same meaning as in section 160AFD;

`class of assessable foreign income' has the same meaning as in section

160AFD;

`exempt income' does not include income to which section 23AH, 23AI or 23AJ or

paragraph 99B (2) (d) or (e) applies;

`foreign income deduction' has the same meaning as in section 160AFD;";

(d) by omitting subsection (14) and substituting the following subsection:

"(14) For the purposes of the definition of

`non-loss deduction' in subsection (12), where:

(a) there are one or more foreign income deductions of a taxpayer in

relation to a class of assessable foreign income in relation to a year of

income; and

(b) either:

(i) the taxpayer did not derive any assessable foreign income of that class

in the year of income; or

(ii) the taxpayer derived assessable foreign income of that class in the

year of income and its amount is exceeded by the sum of the foreign income

deductions;

then:

income deductions are to be disregarded; and

(d) where subparagraph (b) (ii) of this subsection applies - the foreign

income deductions are to be disregarded to the extent of the excess referred

to in that subparagraph.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 12

General domestic losses of pre-1990 years of income

12. Section 80 of the Principal Act is amended:

(a) by inserting in subsections (2B) and (2C) "assessable" before "foreign"

(wherever occurring);

(b) by omitting subsection (3) and substituting the following subsection:

"(3) In this section:

`assessable foreign income' has the same meaning as in section 160AFD; `exempt

income' does not include income to which section 23AH, 23AI or 23AJ or

paragraph 99B (2) (d) or (e) applies;

`net exempt income' means:

(a) where the taxpayer is a resident - the amount by which the taxpayer's

exempt income derived from all sources exceeds the sum of the expenses (not

being expenses of a capital nature) incurred in deriving that income, and any

taxes payable in respect of that income in any country or place outside

Australia; and

(b) where the taxpayer is a non-resident - the amount by which the

taxpayer's exempt income derived from sources in Australia (other than income,

if any, to which section 128D applies) exceeds the sum of the expenses (not

being expenses of a capital nature) incurred in deriving that income.";

before the commencement of the Taxation Laws Amendment (Foreign Income) Act

1990.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 13

Film losses of pre-1990 years of income

13. Section 80AAA of the Principal Act is amended by omitting subsection (2)

and substituting the following subsection:

"(2) In this section, `exempt income' and `net exempt income' have the same

respective meanings as in section 80.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 14

Primary production losses of pre-1990 years of income

14. Section 80AA of the Principal Act is amended by omitting subsection (5)

and substituting the following subsection:

"(5) In this section, `exempt income' and `net exempt income' have the same

respective meanings as in section 80.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 15

Transfer of loss within company group

15. Section 80G of the Principal Act is amended by omitting subsection (19)

and substituting the following subsection:

"(19) In this section, `exempt income' and `net exempt income' have the same

respective meanings as in section 80.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 16

Receipt of trust income not previously subject to tax

16. Section 99B of the Principal Act is amended:

(a) by omitting "or" from the end of paragraph (2) (b);

(b) by adding at the end of subsection (2) the following paragraphs:

"(d) an amount that is or has been included in

the assessable income of any taxpayer (other than a company) under section

102AAZD; or

(e) if the beneficiary is a company - an amount

that is or has been included in the assessable income of the beneficiary under

section 102AAZD.";

"(3) In paragraphs (2) (d) and (e):

`company' means a company other than a company in

the capacity of a trustee.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 17

Revocable trusts

17. Section 102 of the Principal Act is amended by omitting from subsection

(2B) all the words after "to that net income" and substituting the following

words and paragraphs:

"reduced by:

(a) so much (if any) of that net income as is attributable to a period when

the person who created the trust was not a resident and is also attributable

to sources out of Australia; and

(b) so much (if any) of that net income as is not covered by paragraph (a)

and represents an amount included in the assessable income of any taxpayer

under section 102AAZD.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 18

18. After section 102 of the Principal Act the following Division is

inserted:

"Division 6AAA - Special Provisions relating to Non-resident

Trust Estates etc.

"Subdivision A - Preliminary

Object of Division

"102AAA. The object of this Division is to set out rules relating to the

following:

(a) the payment of interest on distributions from certain non-resident

trust estates (Subdivision B);

(b) the winding-up of certain non-resident trust estates in existence on 12

April 1989 (Subdivision C);

(Subdivision D).

Interpretation

"102AAB. In this Division, unless the contrary intention appears:

`1 July 1990 net worth', in relation to a trust estate, means the market

value, as at the beginning of 1 July 1990, of the assets of the trust estate,

reduced by the liabilities of the trust estate as at the beginning of that

day;

`accounts' has the same meaning as in Part X;

`actual transfer', in relation to property or services, means a transfer of

the property or services other than a transfer that is taken to have been made

because of subsection 102AAK (1), (2), (5), (6), (8), (10) or (11);

`approved form' means the form approved in writing by the Commissioner for the

purposes of the provision in which the expression appears;

`arm's length amount', in relation to an actual transfer of property or

services to a trust estate, means the amount that the trustee could reasonably

be expected to have been required to pay to obtain the property or the

services concerned from the transferor under a transaction where the parties

to the transaction are dealing with each other at arm's length in relation to

the transaction;

`associate' has the same meaning as in Part X;

`attributable income', in relation to a trust estate, has the meaning given by

section 102AAU;

`attributable taxpayer' has the meaning given by section 102AAT;

`attribution account payment' has the same meaning as in Part X;

`attribution debit' has the same meaning as in Part X;

`Australian entity' has the same meaning as in Part X;

`Australian trust' has the same meaning as in Part X;

`basic statutory interest rate', in relation to a year of income, means the

interest rate, or each of the interest rates, applicable for the purposes of

section 10 of the Taxation (Interest on Overpayments) Act 1983 for the year of

income or for periods included in the year of income, as the case may be;

`CFC' has the same meaning as in Part X;

`controlled foreign trust' has the same meaning as in Part X;

`corporate unit trust', in relation to a year of income, means a unit trust

that is a corporate unit trust in relation to the year of income for the

purposes of Division 6B;

`de facto marriage' means a relationship between 2 persons who, although not

legally married to each other, live with each other on a bona fide domestic

basis as husband and wife;

`depreciation provision' has the same meaning as in Part X;

`designated concession income' has the same meaning as in Part X;

`discretionary trust estate' means a trust estate 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

estate; or

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 estate;

`eligible designated concession income' has the same meaning as in `entity'

means any of the following:

(a) a company;

(b) a partnership;

(d) any other person;

`exempt income', in relation to a trust estate, means the exempt income of the

trust estate calculated as if the trustee were a taxpayer who was a resident;

`IP time' means 7.30 p.m., by standard time in the Australian Capital

Territory, on 12 April 1989;

`listed country' has the same meaning as in Part X;

`listed country trust estate' has the meaning given by section 102AAE;

`net income', in relation to a trust estate, in relation to a year of income,

means:

(a) if the trust estate is a corporate unit trust in relation to the year

of income - the net income (within the meaning of Division 6B) of the

corporate unit trust of the year of income; or

(b) if the trust estate is a public trading trust in relation to the year

of income - the net income (within the meaning of Division 6C) of the public

trading trust of the year of income; or

of the trust estate;

`non-attributable year of income', in relation to a trust estate, means a

non-resident year of income of the trust estate where no amount calculated by

reference to the attributable income of the trust estate of that year of

income is included in the assessable income of any taxpayer under subsection

102AAZD (1);

`non-discretionary trust estate' means a trust estate other than a

discretionary trust estate;

`non-resident family trust' has the meaning given by section 102AAH;

`non-resident trust estate' (except in section 102AAA), in relation to a year

of income, means a trust estate that is not a resident trust estate in

relation to the year of income;

`non-resident year of income', in relation to a trust estate, means a year of

income in relation to which the trust estate is a non-resident trust estate;

`pre-franking rebate tax', in relation to a taxpayer, in relation to a year of

income, means the tax that would be payable by the taxpayer in respect of

income of the year of income if the taxpayer were not entitled to a rebate

under Part IIIAA;

`profits' includes gains, whether of an income or capital nature;

`property' includes money;

`public trading trust', in relation to a year of income, means a unit trust

that is a public trading trust in relation to the year of income for the

purposes of Division 6C;

`public unit trust' has the meaning given by section 102AAF;

`resident trust estate', in relation to a year of income, means:

(a) a resident trust estate in relation to the year of income within the

meaning of Division 6; or

(b) a unit trust that is a corporate unit trust, or a public trading trust,

in relation to the year of income; or

year of income;

`scheme' means:

(a) any agreement, arrangement, understanding, promise or undertaking,

whether express 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 there are 2 or more parties or only one party involved;

`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 benefit, right,

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 benefits, rights 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

`spouse', in relation to a person, includes another person who, although not

legally married to the person, lives with the person on a bona fide domestic

basis as the husband or wife of the person;

`subject to tax' has the same meaning as in Part X;

`tax accounting period' has the same meaning as in Part X;

`tax law', in relation to a listed country or an unlisted country, has the

same meaning as in Part X;

`transfer':

(a) in relation to property - includes dispose of (whether by assignment,

declaration of trust or otherwise) or provide; and

(b) in relation to services - includes allow, confer, give, grant, perform

or provide;

`trust estate', in relation to a transfer of property or services, means the

trust estate or, as the case requires, the trustee of the trust estate;

`underlying transfer', in relation to a transfer of property or services to a

trust estate, means:

(a) if that transfer was an actual transfer - the actual transfer; or

(b) if that transfer was taken to have been made because of subsection

102AAK (1) - the actual transfer referred to in that subsection; or

102AAK (2) - the actual transfer referred to in paragraph 102AAK (2) (d); or

(d) if that transfer was taken to have been made because of subsection

102AAK (5) - the actual transfer referred to in paragraph 102AAK (5) (b); or

(e) if that transfer was taken to have been made because of the application

of subsection 102AAK (6) or (8) to an actual transfer - the actual transfer;

(f) if that transfer was taken to have been made because of the application

of subsection 102AAK (6) or (8) to a transfer that was taken to have been made

because of subsection 102AAK (1) - the actual transfer referred to in

subsection 102AAK (1); or

(g) if that transfer was taken to have been made because of the application

of subsection 102AAK (6) or (8) to a transfer that was taken to have been made

because of subsection 102AAK (5) - the actual transfer referred to in

paragraph 102AAK (5) (b); or

(h) if that transfer was taken to have been made because of subsection

102AAK (10) - the actual transfer referred to in paragraph 102AAK (10) (b);

(j) if that transfer was taken to have been made because of one or more

applications of subsection 102AAK (11) to an actual transfer - the actual

transfer; or

(k) if that transfer was taken to have been made because of one or more

applications of subsection 102AAK (11) to a transfer (in this paragraph called

the `deemed transfer') that was taken to have been made because of subsection

102AAK (1), (2), (5), (6), (8) or (10) - the actual transfer that, under a

preceding paragraph of this definition, is the underlying transfer in relation

to the deemed transfer;

`underlying transferor', in relation to a transfer of property or services to

a trust estate, means the entity who made the underlying transfer concerned;

`weighted statutory interest rate', in relation to a year of income, means:

(a) if there is only one basic statutory interest rate in relation to the

year of income - that rate; or

(b) if there are 2 or more basic statutory interest rates in relation to

the year of income - the weighted average of the basic statutory rates for the

year of income.

Each listed country and unlisted country to be treated as a separate foreign

country

"102AAC. For the purposes of the application of section 6AB to this

Division, each listed country and each unlisted country is to be treated as a

separate foreign country.

`Subject to tax' - application of subsection 324 (2) "102AAD. Subsection 324

(2) applies in relation to this Division in a corresponding way to the way in

which it applies in relation to Part X. Listed country trust estates

"102AAE. (1) For the purposes of this Division, a trust estate is taken to

be a listed country trust estate in relation to a year of income if, and only

if, either of the following paragraphs applies to each item of income or

profit derived by the trust estate in the year of income:

(a) the income or profit is either:

(i) subject to tax in a listed country in a tax accounting period ending

before the end of the year of income or commencing during the year of income;

(ii) designated concession income in relation to any listed country;

(b) both of the following conditions are satisfied:

(i) a part of the income or profit is either:

(A) subject to tax in a listed country in a tax accounting period ending

before the end of the year of income or commencing during the year of income;

(B) designated concession income in relation to any listed country;

(ii) the remaining part, or each of the remaining parts, of the income or

profit:

(A) is subject to tax in another listed country or in different listed

countries, as the case may be, in a tax accounting period ending before the

end of the year of income or commencing during the year of income; or

(B) is designated concession income in relation to any listed country.

"(2) For the purposes of the application of subparagraph (1) (b) (ii) to a

trust estate, if a particular part of an item of income or profit (which part

is in this subsection called the `item part') derived by the trust estate is

included, or would apart from section 23 be included, in the assessable income

of the trust estate of a year of income (in this subsection called the

`trust's year of income') and either of the following paragraphs applies:

(a) both of the following conditions are satisfied:

(i) the trustee of the trust estate is liable to be assessed and pay tax

under section 98, 99 or 99A in respect of a part of, or a share in, the net

income of the trust estate of the trust's year of income;

(ii) the whole or a part of the part or share of the net income is

attributable to the item part;

(b) all of the following conditions are satisfied:

(i) an amount is included in the assessable income of another taxpayer of

the trust's year of income or the next following year of income (which

taxpayer is in this subsection called the `actual taxpayer') under subsection

92 (1) or section 97, 98A or 100;

(ii) the actual taxpayer is:

(A) a company or a natural person (other than a company or a natural person

in the capacity of a trustee); or

(B) the trustee of an eligible entity (within the meaning of Part IX) in

relation to the year of income concerned; or

concerned; or

(D) the trustee of a public trading trust in relation to the year of income

concerned; or

(E) the trustee of a trust estate who is liable to be assessed and pay tax

under section 98, 99 or 99A in respect of a part of, or a share in, the net

income of a trust estate;

(iii) if sub-subparagraph (ii) (A), (B), (C) or (D) applies - the whole or

a part of the amount so included in the actual taxpayer's assessable income is

attributable (either directly or indirectly through one or more interposed

partnerships or trusts) to the item part;

(iv) if sub-subparagraph (ii) (E) applies - the whole or a part of the part

or share of the net income is attributable (either directly or indirectly

through one or more interposed partnerships or trusts) to the item part;

the item part is to be treated as if it were subject to tax in a listed

country in a tax accounting period ending before the end of the trust's year

of income.

"(3) For the purposes of this section, where a part of a particular item of

income or profits derived by an entity would, if it were a separate item of

income or profits, be taken to be subject to tax in a listed country in a

particular tax accounting period, that part is taken to be subject to tax in

that listed country in that tax accounting period.

Public unit trusts

"102AAF. (1) Subject to this section, for the purposes of this Division, a

unit trust is a public unit trust at all times during a year of income if

either of the following conditions are satisfied:

(a) at any time during the year of income:

(i) any of the units in the unit trust were listed for quotation in the

official list of a stock exchange in Australia or elsewhere; or

(ii) any of the units in the unit trust were offered to the public;

(b) at all times during the year of income, the units in the unit trust

were held by not fewer than 50 persons.

"(2) In determining whether a unit trust is a public unit trust at all times

during a year of income for the purposes of this Division, subsections 102G

(2) to (8) (inclusive) and (10) apply:

(a) as if a reference in those subsections to Division 6B were a reference

to this Division; and

(b) as if a reference in those subsections to subsection 102G (1) were a

reference to subsection (1) of this section; and

relation to a year of income were a reference to a public unit trust at all

times during a year of income.

"(3) In determining whether a unit trust (in this subsection called the

`first unit trust') is a public unit trust at all times during a year of

income for the purposes of this Division, the following provisions have

effect:

(a) the following entities are taken to be one person:

(i) an entity, whether or not it holds units in the first unit trust; and

(ii) the entity or entities who are the associate or associates of the

entity;

(b) where any units in the first unit trust are held by the trustee of

another trust that, apart from this paragraph, is a public unit trust at all

times during the year of income - a person who has a beneficial interest in

property of that other trust that consists of those units is taken to hold

those units;

another trust that:

(i) apart from paragraph (b); or

(ii) by virtue of the application of paragraph (b);

is a public unit trust at all times during the year of income - a person who

has a beneficial interest in the property of that other trust that consists of

those units (whether or not that beneficial interest is taken to be held by

virtue of the application of this paragraph) is taken to hold those units.

When entity is in a position to control a trust estate

"102AAG. (1) For the purposes of this Division, an entity is taken to be in

a position to control a trust estate if, and only if:

(a) a group in relation to the entity had the power by means of the

exercise by the group of any power of appointment or revocation or otherwise,

to obtain, with or without the consent of any other entity, the beneficial

enjoyment of the corpus or income of the trust estate; or

(b) a group in relation to the entity was able in any manner whatsoever,

whether directly or indirectly, to control the application of the corpus or

income of the trust estate; or

the enjoyment or the control referred to in paragraph (a) or (b); or

(d) a trustee of the trust estate was accustomed or under an obligation

(whether formally or informally) or might reasonably be expected to act in

accordance with the directions, instructions or wishes of a group in relation

to the entity; or

(e) a group in relation to the entity was able to remove or appoint the

trustee, or any of the trustees, of the trust estate.

"(2) In subsection (1), a reference to a group in relation to an entity is a

reference to:

(a) the entity acting alone; or

(b) an associate of the entity acting alone; or

(d) 2 or more associates of the entity acting together. Non-resident family

trusts

"102AAH. (1) Subject to subsections (4) and (5), for the purposes of this

Division, a trust estate 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 estate is either:

(i) a post-marital 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.

"(2) For the purposes of this section, a trust estate is a post-marital

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

marriage; 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 non-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;

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.

"(3) For the purposes of this section, a trust estate 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 non-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;

(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

(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 estate 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

estate 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.

"(4) Subsection (1) does not prevent a trust estate 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 non-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.

"(5) Subsections (1) and (4) do not prevent a trust estate 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 funds, authorities or institutions in Australia covered by paragraph

78 (1) (a) that would benefit, or be capable (whether by the exercise of a

power of appointment or otherwise) of benefiting, under the trust.

"(6) 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.

"(7) A reference in this section to a natural person does not include a

reference to a natural person in the capacity of a trustee.

Transfer of property or services

"102AAJ. (1) A reference in this Division to the transfer of property or

services to a trust estate includes a reference to the transfer of such

property or services by way of the creation of the trust estate.

"(2) For the purposes of this Division, where an entity acquires property

that did not previously exist, the property is taken to have existed

immediately before the acquisition and to have been transferred by the entity

who created the property.

"(3) For the purposes of this Division, property or services are taken to

have been transferred to an entity if the property or services have been

applied for the benefit of, or in accordance with the directions of, the

entity.

"(4) Without limiting the generality of subsection (3), a reference in that

subsection to the application of property or services for the benefit of an

entity includes a reference to the application of property or services in the

discharge, in whole or in part, of a debt due by the entity.

"(5) Unless the contrary intention appears, a reference in this Division to

a transfer of property or services includes a reference to a transfer made

before the commencement of this Division.

"(6) A reference in this Division to a transfer of property or services made

before the IP time includes a reference to a transfer made at the IP time.

Deemed transfers of property or services to trust estate

"102AAK. (1) For the purposes of this Division, where an entity (in this

subsection called the `prime entity') causes another entity to actually

transfer property or services to a trust estate, the prime entity is taken to

have transferred the property or services (instead of the other entity).

"(2) For the purposes of this Division, where:

(a) the trustee of a trust estate issues units in the trust to an entity

(in this subsection called the `first entity') in the first entity's capacity

as a manager, underwriter or dealer in relation to the marketing or placement

of the units; and

(b) in the course of the marketing or placement of the units, the units are

disposed of by the first entity to another entity (in this subsection called

the `second entity'); and

transfer time'), the second entity transfers property or services to the first

entity as consideration for the acquisition of the units; and

(d) the first entity has actually transferred, or actually transfers,

property or services (in this subsection called the `original property or

services') to the trust estate for the sole purpose of acquiring the units;

the second entity is taken to have transferred the original property or

services (instead of the first entity) at the second entity's transfer time.

"(3) A reference in subsection (2) to a unit in a trust estate is a

reference to an interest (however described) in any of the income or property

of the trust estate.

"(4) Subsections (1) and (2) do not limit the operation of subsection (5).

"(5) Where, under a scheme:

(a) an entity (in this subsection called the `scheme entity') actually

transfers property or services to another entity; and

(b) property or services are actually transferred to a trust estate at a

particular time otherwise than by the scheme entity;

the Commissioner may, for the purposes of this Division, treat the property or

services mentioned in paragraph (b) as having been transferred by the scheme

entity to the trust estate (instead of by any other entity) at that time to

such extent as the Commissioner considers reasonable.

"(6) For the purposes of this Division, if (apart from subsections (8), (10)

and (11)) an entity, being a partnership, transfers property or services to a

trust estate at a particular time:

(a) each partner in the partnership is taken to have transferred a part of

the property or services to the trust estate at that time; and

(b) the market value of the part transferred by a particular partner is

calculated using the formula:

Market value x Partner's interest

where:

Market value means the market value, immediately

before the transfer, of the property or services transferred by the

partnership;

Partner's interest means:

(i) the partner's percentage interest in the profits of the partnership as

at that time; or

(ii) the partner's percentage interest in the property of the partnership

as at that time;

or, if they are different, whichever is the higher.

"(7) Nothing in paragraph (6) (a) affects the application of this Division

to the transfer made by the partnership concerned.

"(8) For the purposes of this Division, if:

(a) apart from this subsection, subsections (6), (10) and (11), an entity

being the trustee of a trust estate (in this subsection called the `transferor

trust estate') transfers property or services (in this subsection called the

`transferred property or services') to another trust estate (in this

subsection called the `transferee trust estate') at a particular time (in this

subsection called the `transfer time'); and

(b) the transferor trust estate was an Australian trust, or a controlled

foreign trust, at the transfer time; and

transfer time; and

(d) apart from this subsection, subsections (6), (10) and (11), one or more

other entities transferred property or services to the transferor trust estate

at or before the transfer time;

each of those other entities is taken to have transferred the transferred

property or services to the transferee trust estate at the transfer time.

"(9) Nothing in subsection (8) affects the application of this Division to

the transfer mentioned in paragraph (8) (a).

"(10) For the purposes of this Division, where:

(a) any of the following subparagraphs applies:

(i) any of the following events occurs in relation to a company (which

company is in this subsection called the `transferor'):

(A) the company passes a resolution for its winding-up;

(B) an order is made for the winding-up of the company;

(ii) a partnership (in this subsection also called the `transferor') ceases

to exist for the purposes of this Act;

(iii) either of the following sub-subparagraphs applies in relation to the

trustee of a trust estate (in this subsection also called the `transferor'):

(A) the trust estate commences to be wound-up;

(B) the trust estate ceases to exist for the purposes of this Act; and

(b) an actual transfer of property or services is made to a trust estate

(in this subsection called the `transferee') as a consequence of the

transferor being wound-up or ceasing to exist;

the transferor is taken to have transferred to the transferee the property or

services concerned.

"(11) For the purposes of this Division (other than section 102AAN), where:

(a) the following subparagraphs apply to an entity (in this subsection

called the `defunct entity'):

(i) the defunct entity is a company, a

partnership or the trustee of a trust estate;

(ii) the defunct entity transferred property or

services to a trust estate (including a transfer that was taken to have been

made because of another application or other applications of this subsection)

at a particular time;

(iii) if the defunct entity is a company - any of

the following events occurs:

(A) the company passes a resolution for its

winding-up;

(B) an order is made for the winding-up of the

company;

(iv) if the defunct entity is a partnership - the

partnership ceases to exist for the purposes of this Act;

(v) if the defunct entity is a trustee of a trust

estate - either of the following sub-subparagraphs applies:

(A) the trust estate commences to be wound-up;

(B) the trust estate ceases to exist for the

purposes of this Act; and

(b) the Commissioner is satisfied that another entity (in this subsection

called the `successor entity') has benefited or is capable (whether by the

exercise of a power of appointment or otherwise) of benefiting (either

directly or indirectly through one or more interposed companies, partnerships

or trusts) by, or as a result of:

(i) a transfer of property or services made by the defunct entity; or

(ii) a transfer of property or services made as a consequence of the

defunct entity being wound-up or ceasing to exist; and

subsection to the successor entity;

the assessable income of the successor entity of the year of income in which

the event, or the earliest event, mentioned in subparagraph (a) (iii), (iv) or

(v) occurred and of each subsequent year of income is to be determined

as if the successor entity had transferred to the trust estate mentioned in

subparagraph (a) (ii), at the time mentioned in that subparagraph:

(d) the whole of the property or services mentioned in that subparagraph;

(e) if the Commissioner thinks it appropriate - a part of the property or

services referred to in that subparagraph.

Division not to apply to transfers by trustees of deceased estates

"102AAL. A reference in this Division to a transfer of property or services

to a trust estate does not include a reference to a transfer made by the

trustee of the estate of a deceased person under:

(a) the terms of the deceased person's will or codicil; or

(b) an order of a court that varied or modified the provisions of the

deceased person's will or codicil; unless:

trustee or any other person) of a power of appointment or any other

discretion; or

(d) under subsection 102AAK (1), the property or services are taken to have

been transferred by an entity other than the trustee, instead of by the

trustee; or

(e) under subsection 102AAK (5), the Commissioner treats the property or

services as having been (to any extent) transferred by an entity other than

the trustee, instead of by the trustee.

"Subdivision B - Payment of Interest by Taxpayer on

Distributions from Certain Non-resident Trust Estates

Payment of interest by taxpayer on distributions from certain non-resident

trust estates

"102AAM. (1) For the purposes of this section, if:

(a) an amount is included in the assessable income of a taxpayer of a year

of income (which year of income is in this section called the `current year of

income'), being the year of income commencing on 1 July 1990 or a subsequent

year of income, under section 99B in relation to a trust estate; and

(b) the whole or a part of the amount so included in the taxpayer's

assessable income (which whole or part is in this section called the

`distributed amount') is attributable to:

(i) if the trust estate was a listed country

trust estate in relation to a particular non-resident year of income of the

trust estate (in this section called the `non-resident trust's year of

income') - so much of the income and profits of the trust estate of the

non-resident trust's year of income as represents eligible designated

concession income in relation to any listed country in relation to the

non-resident trust's year of income; or

(ii) if the trust estate was not a listed country

trust estate in relation to a particular non-resident year of income of the

trust estate (in this section also called the `non-resident trust's year of

income') - so much of the income and profits of the trust estate of the

non-resident trust's year of income as has not been subject to tax in any

listed country in a tax accounting period:

(A) ending before the end of the non-resident trust's year of income; or

(B) commencing during the non-resident trust's year of income;

then:

trust's year of income; and

(d) the taxpayer is the original taxpayer in relation to the distributed

amount of the non-resident trust's year of income.

"(2) Subject to this section, if the original taxpayer in relation to the

distributed amount of the non-resident trust's year of income is:

(a) a company or a natural person (other than a company or a natural person

in the capacity of a trustee); or

(b) the trustee of a corporate unit trust in relation to the current year

of income; or

(d) the trustee of an eligible entity within the meaning of Part IX in

relation to the current year of income;

the taxpayer is liable to pay interest to the Commissioner in respect of the

distributed amount of the non-resident trust's year of income, calculated

under subsection (5), on the amount calculated using the formula:

(Distributed amount x Applicable rate of tax) - FTC

where:

Distributed amount means the distributed amount of the non-resident trust's

year of income;

Applicable rate of tax has the meaning given by subsection (10);

FTC (Foreign tax credit) means so much of any credit under Division 18 to

which the taxpayer is entitled as is attributable to the distributed amount of

the non-resident trust's year of income.

"(3) Subject to this section, if:

(a) the original taxpayer in relation to the distributed amount of the

non-resident trust's year of income is the trustee of a trust estate who is

liable to be assessed and pay tax under section 98, 99 or 99A in respect of a

part of, or a share in, the net income of the trust estate; and

(b) the whole or a part (which whole or part is in this subsection called

the `taxpayer's portion of the distributed amount of the non-resident trust's

year of income') of the part or share of the net income is attributable to the

distributed amount of the non-resident trust's year of income; the taxpayer is

liable to pay interest to the Commissioner in respect of the taxpayer's

portion of the distributed amount of the non-resident trust's year of income,

calculated under subsection (5), on the amount calculated using the formula:

(Taxpayer's portion of x Applicable) - FTC

(the distributed amount rate of tax)

where:

Taxpayer's portion of the distributed amount means the taxpayer's portion of

the distributed amount of the non-resident trust's year of income;

Applicable rate of tax has the meaning given by subsection (10);

FTC (Foreign tax credit) means so much of any credit under Division 18 to

which the taxpayer is entitled as is attributable to the taxpayer's portion of

the distributed amount of the non-resident trust's year of income.

"(4) Subject to this section, if:

(a) the original taxpayer in relation to the distributed amount of the

non-resident trust's year of income is the trustee of a trust estate or a

partnership; and

(b) the following conditions are satisfied in relation to another taxpayer

(in this subsection called the `actual taxpayer'):

(i) an amount is included in the assessable

income of the actual taxpayer of a year of income under subsection 92 (1) or

section 97, 98A or 100;

(ii) the actual taxpayer is:

(A) a company or a natural person (other than a

company or a natural person in the capacity of a trustee); or

(B) the trustee of an eligible entity (within

the meaning of Part IX) in relation to the year of income; or

relation to the year of income; or

(D) the trustee of a public trading trust in

relation to the year of income; or

(E) the trustee of a trust estate who is liable

to be assessed and pay tax under section 98, 99 or 99A in respect of a part

of, or a share in, the net income of a trust estate;

(iii) if sub-subparagraph (ii) (A), (B), (C) or

(D) applies - the whole or a part of the amount so included in the

actual taxpayer's assessable income (which whole or part is in this subsection

called the `taxpayer's portion of the distributed amount of the non-resident

trust's year of income') is attributable (either directly or indirectly through

one or more interposed partnerships or trusts) to the distributed amount of the

non-resident trust's year of income;

(iv) if sub-subparagraph (ii) (E) applies - the

whole or a part (which whole or part is in this subsection also called the

`taxpayer's portion of the distributed amount of the non-resident trust's year

of income') of the part or share of the net income is attributable (either

directly or indirectly through one or more interposed partnerships or trusts)

to the distributed amount of the non-resident trust's year of income;

the actual taxpayer is liable to pay interest to the Commissioner in respect

of the taxpayer's portion of the distributed amount of the non-resident

trust's year of income, calculated under subsection (5), on the amount

calculated using the formula:

(Taxpayer's portion of x Applicable) - FTC

(the distributed amount rate of tax)

where:

Taxpayer's portion of the distributed amount means the taxpayer's portion of

the distributed amount of the non-resident trust's year of income;

Applicable rate of tax has the meaning given by subsection (10);

FTC (Foreign tax credit) means so much of any credit under Division 18 to

which the taxpayer is entitled as is attributable to the taxpayer's portion of

the distributed amount of the non-resident trust's year of income.

"(5) Interest payable by a taxpayer under this section is to be calculated:

(a) in respect of the period commencing at whichever of the following times

is the latest:

(i) the beginning of the first year of income of

the taxpayer that begins after the end of the non-resident trust's year of

income;

(ii) the beginning of the year of income of the

taxpayer commencing on 1 July 1990;

(iii) if the taxpayer is a natural person (other

than a natural person in the capacity of a trustee) who first commenced to be

a resident of Australia at a time (in this subparagraph called the `first

residence time') on or after 1 July 1990 - the beginning of the year of income

of the taxpayer next following the year of income of the taxpayer in which the

first residence time occurred;

and ending at the end of the assessment year of income; and

(b) at such rate of interest as is, or such rates of interest as are,

applicable for the purposes of section 10 of the Taxation (Interest on

Overpayments) Act 1983.

"(6) Where the assessable income of a taxpayer of a year of income includes

one or more of the following amounts in relation to one or more non-resident

years of income of a particular trust estate (which amounts are in this

subsection called the `principal amounts'):

(a) the distributed amount of the non-resident trust's year of income;

(b) the taxpayer's portion of the distributed amount of the non-resident

trust's year of income;

the aggregate of the interest payable by the taxpayer in respect of the

principal amounts is not to exceed the difference between:

(d) so much of the taxpayer's pre-franking rebate tax for the year of

income as is attributable to the aggregate of the principal amounts.

"(7) For the purposes of this section, the extent to which an amount (in

this subsection called the `section 99B amount') included in the assessable

income of a taxpayer of a year of income under section 99B in relation to a

trust estate is attributable to an amount (in this subsection called the

`trust amount') covered by subparagraph (1) (b) (i) or (ii) is to be

determined in accordance with the following paragraphs:

(a) in all cases - distributions of income and profits of the trust estate

are to be taken to have been made in the following order:

(i) first, from income and profits of the earliest non-resident year of

income;

(ii) then, successively from income and profits of successive subsequent

years of income;

(b) if subparagraph (1) (b) (i) applies - the extent to which the amount

(in this paragraph called the `adjusted section 99B amount'), being so much of

the section 99B amount as is attributable to the income and profits of the

trust estate of the non-resident trust's year of income, represents eligible

designated concession income in relation to any listed country in relation to

the non-resident trust's year of income is calculated using the formula:

Adjusted Eligible designated

section 99B x concession income

amount Total income

where:

Adjusted section 99B amount means the adjusted section 99B amount;

Eligible designated concession income means the number of dollars in the

amount, being so much of the income and profits of the trust estate of the

non-resident trust's year of income as represents eligible designated

concession income in relation to any listed country in relation to the

non-resident trust's year of income;

Total income means the number of dollars in the income and profits of the

trust estate of the non-resident trust's year of income;

(in this paragraph called the `adjusted section 99B amount'), being so much of

the section 99B amount as is attributable to the income and profits of the

trust estate of the non-resident trust's year of income, represents income and

profits that have not been subject to tax in a listed country in a tax

accounting period mentioned in that subparagraph is calculated using the

formula:

Adjusted

section 99B x Untaxed income

amount Total income

where:

Adjusted section 99B amount means the adjusted section 99B amount;

Untaxed income means the number of dollars in the amount, being so much of the

income and profits of the trust estate of the non-resident trust's year of

income as is not subject to tax in any listed country in a tax accounting

period mentioned in that subparagraph;

Total income means the number of dollars in the income and profits of the

trust estate of the non-resident trust's year of income.

"(8) For the purposes of subsection (7), an amount of income or profits of a

trust estate is to be taken to be distributed if the amount is paid to, or

applied for the benefit of (within the meaning of section 99B), a beneficiary

of the trust estate.

"(9) Where, apart from this subsection, the amount of interest that would be

payable under this section by a taxpayer in respect of the distributed amount

of a non-resident trust's year of income, or in respect of the taxpayer's

portion of the distributed amount of a non-resident trust's year of income, is

less than 50 cents, interest is not payable by the taxpayer under this

section.

"(10) For the purposes of this section, the applicable rate of tax in

relation to a taxpayer is:

(a) if the taxpayer is a company (other than a company in the capacity of a

trustee) - the general company tax rate (within the meaning of Part IIIAA) for

the year of tax to which the assessment year of income relates; or

(b) in any other case - the maximum rate specified in Column 2 of the table

in Part I of Schedule 7 of the Income Tax Rates Act 1986 that applies for the

assessment year of income.

"(11) For the purposes of the application of this section to a taxpayer, the

assessment year of income is:

(a) if subsection (2) or (3) applies - the current year of income; or

(b) if subsection (4) applies - the year of income referred to in

subparagraph (4) (b) (i).

"(12) The Commissioner must make an assessment of the interest payable by a

taxpayer under this section.

"(13) Nothing in this Act precludes notice of an assessment made in respect

of a taxpayer under subsection (12) from being incorporated in a notice of any

other assessment made in respect of the taxpayer under this Act.

"(14) Unless the contrary intention appears, in sections 170, 172, 174, 201,

204, 205, 206, 207, 208, 209, 214, 215, 216, 254, 255, 258, 259 and 265, but

not in any other section of this Act, `income tax' or `tax' includes interest

payable under this section.

"Subdivision C - Winding-up of Non-resident Trust

Estates in Existence on 12 April 1989

Winding-up of non-resident trust estates - tax rebates

"102AAN. (1) If:

(a) an amount (in this section called the `section 99B amount') is included

in the assessable income of a taxpayer of:

(i) the year of income commencing on 1 July 1988 (which year of income is

in this section called the `taxpayer's year of income'); or

(ii) the year of income commencing on 1 July 1989 (which year of income is

in this section also called the `taxpayer's year of income'); or

(iii) the year of income commencing on 1 July 1990 (which year of income is

in this section also called the `taxpayer's year of income');

under section 99B in relation to:

(iv) a trust estate that:

(A) if the period commencing on 1 July 1988 and

ending at the IP time had been a year of income, would be a non-resident trust

estate in relation to that year of income; and

(B) was in existence, and was a discretionary

trust estate, at the IP time; and

(v) an amount paid to, or applied for the benefit

of (within the meaning of section 99B), the taxpayer after the IP time; and

(b) before the IP time, one or more entities (in this section called the

`transferors') transferred property or services to the trust estate; and

(i) in any case - the time of that transfer of property or services; or

(ii) in the case of an entity who is a natural person (other than a natural

person in the capacity of trustee) - the end of 30 June 1991; or

(iii) in the case of an entity to whom subparagraph (ii) does not apply -

the IP time; and

(d) the trust estate is completely wound up before 30 June 1991; and

(e) neither the transferors, nor any associate of the transferors,

transferred property or services to the trust estate after the IP time (not

being property or services relating to, or consisting of, the provision of

personal services in connection with that winding-up);

the following provisions have effect:

(f) the taxpayer is the original taxpayer in relation to the section 99B

amount and in relation to the taxpayer's year of income;

(g) the section 99B amount, as reduced by so much of that amount as

represents an amount that, if it had been derived by a taxpayer being a

resident, would have been an amount of assessable income derived, or included

in assessable income, in respect of property or services transferred to the

trust estate after the IP time, is to be taken to be the rebatable section 99B

amount.

"(2) If the original taxpayer in relation to the section 99B amount in

relation to the taxpayer's year of income is:

(a) a company or a natural person (other than a company or a natural person

in the capacity of a trustee); or

(b) the trustee of a corporate unit trust in relation to the taxpayer's

year of income; or

(d) the trustee of an eligible entity (within the meaning of Part IX) in

relation to the taxpayer's year of income;

the following provisions have effect:

(e) the taxpayer is entitled to a rebate of tax in the taxpayer's

assessment for the taxpayer's year of income of such an amount (if any) that

is necessary to ensure that the rate of tax on the rebatable section 99B

amount does not exceed 10%;

(f) a reference in subsection 160AF (1) to the foreign income of the

taxpayer does not include a reference to the rebatable section 99B amount.

"(3) If:

(a) the original taxpayer in relation to the section 99B amount in relation

to the taxpayer's year of income is the trustee of a trust estate who is

liable to be assessed and pay tax under section 98, 99 or 99A in respect of a

part of, or a share in, the net income of the trust estate; and

(b) the whole or a part (which whole or part is in this subsection called

the `taxpayer's portion of the section 99B amount') of the part or share of

the net income is attributable to the section 99B amount;

the following provisions have effect:

assessment for the taxpayer's year of income of such an amount (if any) as is

necessary to ensure that the rate of tax on so much of the taxpayer's portion

of the section 99B amount as represents the rebatable section 99B amount does

not exceed 10%;

(d) a reference in subsection 160AF (1) to the foreign income of the

taxpayer does not include a reference to the rebatable section 99B amount.

"(4) If:

(a) the original taxpayer in relation to the section 99B amount in relation

to the taxpayer's year of income is the trustee of a trust estate or a

partnership; and

(b) the following conditions are satisfied in relation to another taxpayer

(in this subsection called the `actual taxpayer'):

(i) an amount is included in the assessable

income of the actual taxpayer of a year of income (in this subsection called

the `current year of income') under subsection 92 (1) or section 97, 98A or

100;

(ii) the actual taxpayer is:

(A) a company or a natural person (other than a

company or a natural person in the capacity of a trustee); or

(B) the trustee of an eligible entity (within

the meaning of Part IX) in relation to the current year of income; or

relation to the current year of income; or

(D) the trustee of a public trading trust in

relation to the current year of income; or

(E) the trustee of a trust estate who is liable

to be assessed and pay tax under section 98, 99 or 99A in respect of a part

of, or a share in, the net income of a trust estate;

(iii) if sub-subparagraph (ii) (A), (B), (C) or

(D) applies - the whole or a part of the amount so included in the

actual taxpayer's assessable income (which whole or part is in this subsection

called the `taxpayer's portion of the section 99B amount') is attributable

(either directly or indirectly through one or more interposed partnerships or

trusts) to the section 99B amount;

(iv) if sub-subparagraph (ii) (E) applies - the

whole or a part (which whole or part is in this subsection also called the

`taxpayer's portion of the section 99B amount') of the part or share of the

net income is attributable (either directly or indirectly through one or more

interposed partnerships or trusts) to the section 99B amount; the following

provisions have effect:

assessment for the current year of income of such an amount (if any) as is

necessary to ensure that the rate of tax on so much of the taxpayer's portion

of the section 99B amount as represents the rebatable section 99B amount

concerned does not exceed 10%;

(d) a reference in subsection 160AF (1) to the foreign income of the actual

taxpayer does not include a reference to so much of the taxpayer's portion of

the section 99B amount as represents the rebatable section 99B amount

concerned.

Winding-up of non-resident discretionary trusts - adjustment of tax treatment

of beneficiaries

"102AAP. Where:

(a) the trustee of a trust estate has a discretion to pay or apply income

of the trust estate to or for the benefit of specified beneficiaries; and

(b) the trust estate is completely wound up before 30 June 1991; and

beneficiary:

(i) in the course of that winding-up; and

(ii) during a year of income mentioned in subparagraph 102AAN (1) (a) (i),

(ii) or (iii); and

(iii) after the IP time; and

(d) under section 101, the beneficiary is taken to be presently entitled to

the amount (in this subsection called the `distributed amount') paid to the

beneficiary or applied to the beneficiary's benefit by the trustee in the

exercise of that discretion; and

(e) the conditions set out in subparagraph 102AAN (1) (a) (iv) and

paragraphs 102AAN (1) (b), (c) and (e) are satisfied in relation to the trust

estate;

the following provisions have effect:

(f) neither section 97 nor 98 is taken to have applied in relation to the

beneficiary's present entitlement to the distributed amount;

(g) the distributed amount is taken to have been included in the assessable

income of the beneficiary of the taxpayer's year of income under section 99B.

Winding-up of non-resident trust estates - modified accruals system of

taxation

"102AAQ. Where the conditions set out in subparagraph 102AAN (1) (a) (iv)

and paragraphs 102AAN (1) (b) to (e) (inclusive) are satisfied in relation to

a trust estate, then, for the purposes of this Division, an entity is not

taken to be an attributable taxpayer in relation to:

(a) the year of income of the entity commencing on 1 July 1990; or

(b) the year of income of the entity commencing on 1 July 1991;

and in relation to the trust estate.

When trust estate is taken to be completely wound up

"102AAR. For the purposes of this Subdivision, a trust estate is not taken

to be completely wound up as at a particular time unless:

(a) all of the liabilities of the trust estate are discharged before that

time; and

(b) all of the property of the trust estate is distributed to the

beneficiaries of the trust estate before that time.

"Subdivision D - Accruals System of Taxation of Certain

Non-resident Trust Estates

Object of Subdivision

"102AAS. The object of this Subdivision is to set out rules relating to the

following:

(a) the determination of attributable taxpayer status (section 102AAT);

(b) the calculation of the attributable income of a trust estate (sections

102AAU to 102AAZC (inclusive));

102AAZE and 102AAZF);

(d) the keeping of associated records (section 102AAZG).

Accruals system of taxation - attributable taxpayer

"102AAT. (1) Subject to this Division, for the purposes of this Division, an

entity is an attributable taxpayer in relation to a year of income of the

entity (which year of income is in this section called the `entity's current

year of income') and in relation to a particular trust estate if, and only

if:

(a) either of the following subparagraphs applies:

(i) all of the following conditions are

satisfied:

(A) the trust estate was a discretionary trust

estate at any time during the entity's current year of income;

(B) the trust estate was not a public unit trust at all times during the

entity's current year of income;

a time (in this subparagraph called the `transfer time') before or during the

entity's current year of income;

(D) if the underlying transfer was made in the course of carrying on a

business - it is not the case that, at or about the time of the underlying

transfer, identical or similar property or services were transferred by the

underlying transferor in the ordinary course of business to ordinary clients

or customers under arm's length transactions and in similar circumstances and

subject to identical or similar terms and conditions as those that applied in

relation to the underlying transfer of the property or services concerned;

(E) if the underlying transfer was made under an arm's length transaction

otherwise than in the course of carrying on a business - the entity was in a

position, at any time after the transfer time and before the end of the

entity's current year of income, to control the trust estate;

(F) if the transfer was made before the IP time and the trust estate was in

existence, and was a discretionary trust estate, at the IP time - the entity

was in a position, at any time after the IP time and before the end of the

entity's current year of income, to control the trust estate;

(ii) all of the following conditions are

satisfied:

(A) the trust estate was a non-discretionary

trust estate, or a public unit trust, at all times during the entity's current

year of income when the trust estate was in existence;

(B) the entity has transferred property or

services to the trust estate after the IP time and before or during the

entity's current year of income;

consideration or for a consideration less than the arm's length amount in

relation to the underlying transfer;

(D) it is not the case that the sole purpose of

the underlying transfer was the acquisition of units in the trust estate where

the parties to the underlying transfer were at arm's length with each other in

relation to the underlying transfer and the trust estate was a public unit

trust at all times during the entity's current year of income when the trust

estate was in existence; and

(b) if the entity is a natural person (other than a natural person in the

capacity of a trustee):

(i) if:

(A) the natural person first commenced to be a resident of Australia at a

time (in this subparagraph called the `first residence time') after the IP

time and before the end of the entity's current year of income; and

(B) the transfer, or each of the transfers, covered by paragraph (a) was

made before the first residence time;

the trust estate was not a non-resident family trust in relation to the

natural person at all times:

after the first residence time; and

(D) before the end of the entity's current year of income;

when the trust estate was in existence; or

(ii) in any other case - the trust estate was not a non-resident family

trust in relation to the natural person at all times after the beginning of

the year of income of the taxpayer commencing on 1 July 1990 and before the

end of the entity's current year of income when the trust estate was in

existence; and

(i) the entity is a natural person (other than a natural person in the

capacity of a trustee) who first commenced to be a resident of Australia at a

time (in this paragraph called the `first residence time') after the IP time

and before the end of the entity's current year of income; and

(ii) the transfer was made before the first residence time; and

(iii) the entity was not in a position to control the trust estate at any

time during the period:

(A) commencing at the beginning of the first year of income of the entity

after the first residence time; and

(B) ending at the end of the entity's current year of income.

"(2) For the purposes of this section, if:

(a) an entity (in this subsection called the `transferor') being a

partnership is an attributable taxpayer in relation to the entity's current

year of income and in relation to a particular trust estate (in this

subsection called the `transferee trust estate') because of one or more

transfers (being actual transfers or transfers taken to have been made because

of subsection 102AAK (1), (2) or (5)) of property or services made by the

transferor to the transferee trust estate; or

(b) an entity (in this subsection also called the `transferor') being a

trust estate is an attributable taxpayer in relation to the entity's current

year of income and in relation to another trust estate (in this subsection

also called the `transferee trust estate') because of one or more transfers

(being actual transfers or transfers taken to have been made because of

subsection 102AAK (1), (2) or (5)) of property or services made by the

transferor to the transferee trust estate;

the question whether any other entity is an attributable taxpayer in relation

to the same year of income and in relation to the transferee trust estate is

to be determined as if:

relation to any of the transfers mentioned in that paragraph; or

(d) if paragraph (b) applies - subsection 102AAK (8) did not apply in

relation to any of the transfers mentioned in that paragraph.

"(3) If:

(a) apart from this subsection, an entity, being a natural person (other

than a natural person in the capacity of a trustee), is not an attributable

taxpayer in relation to the entity's current year of income and in relation to

a trust estate; and

(b) apart from paragraph (1) (b), the entity would have been such an

attributable taxpayer; and

estate was not a non-resident family trust in relation to the natural person

at some time after the entity's current year of income when the natural person

was alive and the trust estate was in existence;

the following provisions have effect:

(d) subsection (1) has effect as if paragraph (1) (b) had applied;

(e) section 170 does not prevent the amendment of an assessment at any time

for the purposes of giving effect to this subsection.

"(4) If:

(a) apart from this subsection, an entity is not an attributable taxpayer

in relation to the entity's current year of income and in relation to a trust

estate; and

(b) apart from sub-subparagraph (1) (a) (i) (E) or (F) or paragraph (1)

(c), the entity would have been such an attributable taxpayer; and

after the entity's current year of income when the trust estate was in

existence;

the following provisions have effect:

(d) subsection (1) has effect as if sub-subparagraph (1) (a) (i) (E) or (F)

or paragraph (1) (c), as the case may be, had applied;

(e) section 170 does not prevent the amendment of an assessment at any time

for the purposes of giving effect to this subsection.

Attributable income of a trust estate

"102AAU. (1) Subject to this Subdivision, the attributable income of a

non-resident trust estate of a year of income is:

(a) if the non-resident trust estate is not a listed country trust estate

in relation to the year of income - the net income of the non-resident trust

estate of the year of income; or

(b) if the non-resident trust estate is a listed country trust estate in

relation to the year of income - the amount that would have been the net

income of the non-resident trust estate of the year of income if the exempt

income of the trust estate included all income and profits of the trust estate

other than eligible designated concession income in relation to any listed

country in relation to the year of income;

reduced by:

represents:

(i) an amount:

(A) that is or has been included in the

assessable income of a beneficiary under section 97; or

(B) in respect of which the trustee of the

non-resident trust estate is or has been assessed and liable to pay tax under

section 98, 99 or 99A; or

(ii) an amount:

(A) that is paid to a beneficiary, being a

resident of a listed country, during the period of 13 months commencing at the

beginning of the year of income; and

(B) subject to tax in a listed country in a tax accounting period ending

before the end of the year of income or commencing during the year of income;

(iii) an amount that consists of, or is

attributable to, so much of a frankable dividend (within the meaning of Part

IIIAA) as has been franked in accordance with section 160AQF; or

(iv) an amount that is included in the assessable

income of the trustee of the trust estate under section 160AQT; or

(v) if an amount is or has been included in the

assessable income of any taxpayer under section 102AAZD because the taxpayer

is an attributable taxpayer in relation to any year of income (in this

subparagraph called the `taxpayer's year of income') and in relation to a

trust estate other than the non-resident trust estate - so much of an amount

paid to the trustee of the non-resident trust estate as represents the

attributable income of that other trust estate of the taxpayer's year of

income; or

(vi) if:

(A) one or more amounts (in this subparagraph called the `section 458

amounts') are included in the assessable incomes of one or more taxpayers

under section 458 in respect of a dividend paid by a CFC; and

(B) the assessable income of the trust estate of the year of income

includes an amount that is attributable (either directly or indirectly through

one or more interposed partnerships or trusts) to the payment of the

dividend;

the total of the section 458 amounts; or

(vii) if:

(A) an attribution account payment is made to the trustee of the trust

estate during the year of income; and

(B) the making of the attribution account payment gives rise to an

attribution debit, in relation to any taxpayer, for the entity making the

payment;

the amount of the attribution debit; or

(viii) an amount of income or profits of the trust estate:

(A) that is subject to tax in any listed country in a tax accounting period

ending before the end of the year of income or commencing during the year of

income; and

(B) that is not eligible designated concession income in relation to any

listed country in relation to the year of income; and

(d) so much of any foreign tax or Australian tax paid by the trustee or a

beneficiary as is attributable to so much of the amount covered by paragraph

(a) or (b), as the case requires, as remains after the reduction or

reductions covered by paragraph (c).

"(2) The attributable income of a resident trust estate of a year of income

is 0.

"(3) For the purposes of sub-subparagraph (1) (c) (ii) (A), a beneficiary is

to be taken to be a resident of a listed country if, and only if, the

beneficiary is treated as a resident of the listed country for the purposes of

the tax law of the listed country.

"(4) If the tax law of a listed country adopts some criterion other than

treatment as a resident as the criterion for applying a worldwide source tax

base to a beneficiary, then, subsection (3) has effect, in relation to that

tax law, as if that criterion were the same as treatment as a resident of the

listed country for the purposes of that tax law.

"(5) For the purposes of this section, where, because of section 101, a

beneficiary is presently entitled to a particular amount, the amount is taken

to have been paid to the beneficiary.

"(6) For the purposes of this section, the extent to which an amount

referred to in subparagraph (1) (c) (i) or (ii) (in this subsection called the

`taxed amount') represents the amount covered by paragraph (1) (b) (in this

subsection called the `listed country trust amount') is calculated using the

formula:

Taxed amount

Listed country

Taxed amount x trust amount

--------------

Net income

where:

Taxed amount means the taxed amount;

Listed country trust amount means the number of dollars in the listed country

trust amount;

Net income means the number of dollars in the net income of the non-resident

trust estate concerned of the year of income concerned.

Double tax agreements to be disregarded

"102AAV. In calculating the attributable income of a trust estate, the

Income Tax (International Agreements) Act 1953 is to be disregarded, except

for the purpose of references in this Act to that Act.

Certain provisions to be disregarded in calculating attributable income

"102AAW. For the purpose of applying this Act in calculating the

attributable income of a trust estate, sections 20, 23AI, 38 to 43

(inclusive), 128D, 456, 457, 458 and 459 are to be disregarded.

Income and expenses to be expressed in Australian currency

"102AAX. (1) For the purpose of applying this Act in calculating the

attributable income of a trust estate of a year of income, any amount (in this

section called an `eligible amount') of income wherever derived or of

expenditure wherever incurred is to be expressed in Australian currency.

"(2) Where, according to the accounts of the trust estate that are used to

calculate the attributable income of the trust estate of the year of income,

some or all of the eligible amounts of the trust estate are not expressed in

Australian currency, then any such eligible amount is to be converted:

(a) if there is a single or predominant foreign currency in which the

eligible amounts of the trust estate are expressed in the accounts and

paragraph (b) does not apply:

(i) where the eligible amount is expressed in that currency - to Australian

currency at a rate equal to:

(A) if sub-subparagraph (B) does not apply - the average of the exchange

rates applicable from time to time during the year of income; or

(B) if the trustee of the trust estate elects in accordance with subsection

(3) - the exchange rate applicable on the last day of the year of income; or

(ii) in any other case - first to the single or predominant currency using

any reasonable method and then to Australian currency in accordance with

whichever of sub-subparagraph (i) (A) or (B) applies; or

(b) if the eligible amount is an amount of foreign tax paid by the trustee

of the trust estate:

(i) if the foreign tax was paid by deduction from another amount - to

Australian currency, or to another currency and then to Australian currency,

according to the method applicable under paragraph (a) or (c) for the

conversion of the amount from which it was deducted; or

(ii) in any other case - to Australian currency at the rate of exchange

applicable at the time when the foreign tax was paid; or

any reasonable method.

"(3) The trustee of the trust estate may elect that sub-subparagraph (2) (a)

(i) (B) is to apply in relation to the trust estate.

"(4) An election under subsection (3):

(a) must be in writing; and

(b) must be lodged with the Commissioner before the end of the period of 30

days after the end of the year of income concerned, or within such further

period as the Commissioner allows.

"(5) Where the trustee of the trust estate does so, that sub-subparagraph

applies instead of sub-subparagraph (2) (a) (i) (A) in calculating the

attributable income of the trust estate for the year of income and for all

subsequent years of income.

Modified application of trading stock provisions

"102AAY. For the purpose of applying this Act in calculating the

attributable income of the trust estate, Subdivision B of Division 2 of Part

III has effect as if the value of the article of trading stock to be taken

into account at the beginning of the year of income were its cost price.

Modified application of depreciation provisions

"102AAZ. (1) For the purpose of determining the attributable income of a

trust estate of a year of income (in this section called the `attributable

year of income'), where property has been held by the trustee of the trust

estate in a non-attributable year of income before the attributable year of

income, then, in relation to the application of a depreciation provision to

the property, subsection (2) applies.

"(2) Such amount as the Commissioner considers appropriate to take account

of the holding of the property as mentioned in subsection (1) is, under the

depreciation provision:

(a) an allowable deduction to the trustee of the trust estate; or

(b) included in the assessable income of the trust estate;

as the case requires, for the attributable year of income in substitution for

any amount that would otherwise be so included or allowable.

"(3) For the purpose of exercising the Commissioner's power under subsection

(2) in relation to deductions allowable under sections 54 to 62 (inclusive),

the Commissioner must assume that the property was used by the trustee of the

trust estate during any non-attributable year of income wholly and exclusively

for the purpose of producing assessable income.

Modified application of Division 13 of Part III

"102AAZA. In calculating the attributable income of a trust estate of a year

of income:

(a) for the purposes of section 136AC, if the trust estate is a

non-resident trust estate in relation to the year of income - the trustee is

taken to be a non-resident, within the meaning of that section, without regard

to the assumption about the trustee's residence that is made in whichever of

the following provisions is applicable:

(i) the definition of `net income' in subsection 95 (1);

(ii) the definition of `net income' in subsection 102D (1);

(iii) the definition of `net income' in section 102M;

(iv) section 272; and

(b) section 136AF applies as if:

(i) the reference in subsection 136AF (1) to the application of section

136AD in relation to a taxpayer were a reference both to:

(A) the application of that section in relation to any trust estate in

calculating its attributable income or in relation to any CFC in calculating

its attributable income under Division 7 of Part X; and

(B) the actual application of that section in relation to any taxpayer in

calculating the taxable income of the taxpayer apart from this Division; and

(ii) the references in paragraphs 136AF (1) (a) and (b) to assessable

income or allowable deductions in relation to the relevant taxpayer were

references to assessable income, or to allowable deductions, taken into

account in calculating the attributable income of the trust estate.

Modified application of Part IIIA

"102AAZB. For the purposes of applying this Act in calculating the

attributable income of a trust estate, Part IIIA applies as if:

(a) the following provisions were disregarded:

(i) subsections 160M (13) and (14);

(ii) subsection 160Z (6) and paragraph 160Z (9) (c); and

(b) the trust estate were a resident trust estate, or a resident unit

trust, as the case may be.

Modified application of loss provisions - pre-1990-91 losses

"102AAZC. (1) In calculating the attributable income of a trust estate of a

year of income, no deductions are allowable under section 79E, 79F, 80, 80AAA

or 80AA in respect of losses of a year of income earlier than the year of

income commencing on 1 July 1990.

"(2) In calculating the attributable income of a trust estate of a year of

income, section 160AFD does not apply to an overall foreign loss incurred in a

year of income earlier than the year of income commencing on 1 July 1990.

Assessable income of attributable taxpayer to include attributable income of

trust estate to which taxpayer has transferred property or services

"102AAZD. (1) Subject to section 102AAZE and to this section, if:

(a) an entity is an attributable taxpayer:

(i) in relation to the year of income of the taxpayer commencing on 1 July

1990 (which year of income is in this section called the `taxpayer's current

year of income') or in relation to a subsequent year of income of the taxpayer

(which year of income is in this section also called the `taxpayer's current

year of income'); and

(ii) in relation to a trust estate; and

(b) any part of a non-resident year of income of the trust estate occurs

during the taxpayer's current year of income; and

year of income; the assessable income of the taxpayer of the taxpayer's

current year of income includes:

(d) if the taxpayer is a resident at all times during the taxpayer's

current year of income - the whole of the notional attributable income of the

trust estate of the taxpayer's current year of income; or

(e) if the taxpayer is a resident for only part of the taxpayer's current

year of income - the amount calculated using the formula:

Notional attributable income x Days in residency

period

Notional attributable income x Days in year of

income

where:

Notional attributable income means the notional

attributable income of the trust estate of the taxpayer's current year of

income;

Days in residency period means the number of whole

days during the taxpayer's current year of income when the taxpayer was a

resident;

Days in year of income means the number of whole

days in the taxpayer's current year of income.

"(2) A reference in subsection (1) to the notional attributable income of

the trust estate of the taxpayer's current year of income is a reference to:

(a) if there is a year of income of the trust estate that begins at the

same time as the beginning of the taxpayer's current year of income - the

attributable income of the trust estate of that year of income; or

(b) in any other case - the amount obtained:

(i) by calculating, for each year of income of the trust estate (in this

paragraph called the `trust's year of income') any part of which occurs during

the taxpayer's current year of income, the amount calculated using the

formula:

Attributable income Days in overlapping period

Days in trust's year of income

where:

Attributable income means the attributable income of the trust estate of the

trust's year of income;

Days in overlapping period means the number of whole days in the trust's year

of income that occurred during the taxpayer's current year of income;

Days in trust's year of income means the number of whole days in the trust's

year of income; and

(ii) by adding together the amounts calculated under subparagraph (i).

"(3) If:

(a) an amount is included in the assessable income of an attributable

taxpayer of the taxpayer's current year of income under subsection (1); and

(b) before or during the taxpayer's current year of income, one or more

entities other than the taxpayer have transferred property or services to the

trust estate concerned; and

form, such information in connection with the operation of this Division as is

required by the form to be set out;

the Commissioner may reduce the amount included in the taxpayer's assessable

income of the taxpayer's current year of income under subsection (1) having

regard to:

(d) the extent to which the attributable income of the trust estate is, in

the opinion of the Commissioner, attributable to property or services

transferred by the taxpayer; and

(e) such other matters as the Commissioner considers relevant.

"(4) If:

(a) apart from this subsection, an amount would be included in the

assessable income of an attributable taxpayer of the taxpayer's current year

of income under subsection (1) in relation to a particular trust estate; and

(b) the taxpayer could not reasonably be expected to obtain the information

required to determine the attributable income of the trust estate;

the following provisions have effect:

the taxpayer's current year of income under subsection (1) in relation to the

trust estate;

(d) the assessable income of the taxpayer of the taxpayer's current year of

income includes the amount obtained:

(i) if any of the transfers that were taken into

account in determining whether the taxpayer was an attributable taxpayer in

relation to the taxpayer's current year of income and in relation to the trust

estate were made by the taxpayer to the trust estate after the IP time - by

calculating, for each such transfer, the amount calculated using the formula:

Adjusted value ( Weighted )

of the transfer (statutory interest)

( rate + 5% )

where:

Adjusted value of the transfer has the meaning given by subsection (5);

Weighted statutory interest rate means the weighted statutory interest rate in

relation to the taxpayer's current year of income; and

(ii) if any of the transfers that were taken into

account in determining whether the taxpayer was an attributable taxpayer in

relation to the taxpayer's current year of income and in relation to the trust

estate were made by the taxpayer to the trust estate before the IP time - the

amount calculated using the formula:

Adjusted net ( Weighted )

worth of trust (statutory interest)

estate ( rate + 5% )

where:

Adjusted net worth of trust estate has the meaning given by subsection (6);

Weighted statutory interest rate means the weighted statutory interest rate in

relation to the taxpayer's current year of income; and

(iii) by adding together the amounts calculated

under subparagraphs (i) and (ii).

"(5) For the purposes of subsection (4), the adjusted value of a transfer of

property or services made by an attributable taxpayer to a trust estate is:

(a) if the transfer occurred during the taxpayer's current year of income -

the amount calculated using the formula:

Market value of transferred X Days after transfer

property or services Days in year of income

where:

Market value of transferred property or services means the market value,

immediately before the transfer, of the property or services;

Days after transfer means the number of whole days in the taxpayer's current

year of income after the day on which the transfer took place;

Days in year of income means the number of whole days in the taxpayer's

current year of income; or

(b) if the transfer of the property or services occurred before the

taxpayer's current year of income - the sum of:

(i) the market value, immediately before the

transfer, of the property or services; and

(ii) the amount obtained:

(A) by calculating, in respect of the transfer,

for each year of income preceding the taxpayer's current year of income, the

amount ascertained using the formula in subparagraph (4) (d) (i); and

(B) by adding together the amounts calculated

under sub-subparagraph (A).

"(6) For the purposes of the application of subsection (4) in relation to a

transfer of property or services made by an attributable taxpayer to a trust

estate, the adjusted net worth of the trust estate is:

(a) if the taxpayer's current year of income is the year of income

commencing on 1 July 1990 - the 1 July 1990 net worth of the trust estate; or

(b) in any other case - the sum of:

(i) the 1 July 1990 net worth of the trust

estate; and

(ii) the amount obtained:

(A) by calculating, in respect of the transfer,

for each year of income preceding the taxpayer's current year of income, the

amount ascertained using the formula in subparagraph (4) (d) (ii); and

(B) by adding together the amounts calculated

under sub-subparagraph (A).

"(7) If:

(a) subsection (4) applies to an attributable taxpayer in relation to the

taxpayer's current year of income; and

(b) any of the transfers taken into account in determining whether the

taxpayer was an attributable taxpayer in relation to the taxpayer's year of

income and in relation to the trust estate concerned were made before the IP

time; and

form, such information in connection with the operation of this Division as is

required by the form to be set out;

the Commissioner may reduce the amount included in the taxpayer's assessable

income of the taxpayer's current year of income under subsection (4) having

regard to:

(d) the extent to which the market value, as at the beginning of the

taxpayer's current year of income, of the assets of the trust estate is, in

the opinion of the Commissioner, attributable to property or services

transferred by the taxpayer before the IP time; and

(e) such other matters as the Commissioner considers relevant.

Accruals system of taxation does not apply to small amounts

"102AAZE. An amount is not to be included in the assessable income of the

taxpayer of a year of income under section 102AAZD in relation to a trust

estate that is a listed country trust estate in relation to the year of income

if the amount obtained by:

(a) identifying each trust estate in relation to which the taxpayer is an

attributable taxpayer in relation to the year of income; and

(b) calculating the attributable income of the year of income of each such

trust estate; and

does not exceed the lesser of the following amounts:

(d) $20,000;

(e) 10% of the total of the net incomes of each of those trust estates of

the year of income.

Only resident partners, beneficiaries etc. liable to be assessed as a result

of attribution

"102AAZF. Section 460 applies to an amount included in the assessable income

of a taxpayer under section 102AAZD in a corresponding way to the way in which

section 460 applies to an amount included in the assessable income of a

taxpayer under section 456, 457, 458 or 459 and, for the purposes of that

corresponding application, references in sections 336, 338 and 460 to a Part X

Australian resident are to be read as references to a resident within the

meaning of section 6.

Keeping of records

"102AAZG. (1) Subject to this section, a person who is an attributable

taxpayer:

(a) in relation to the year of income of the person commencing on 1 July

1990 or in relation to a subsequent year of income of the person; and

(b) in relation to a particular trust estate;

must keep records (in Australia or elsewhere) containing particulars of:

person being an attributable taxpayer in relation to that year of income and

in relation to that trust estate; and

(d) except where subsection 102AAZD (4) applies in relation to the trust

estate and in relation to the year of income of the person - the basis of the

calculation of the attributable income of the trust estate for each year of

income of the trust estate any part of which occurred during the year of

income of the person; and

(e) the basis of the calculation of the amounts (including nil amounts)

included in the assessable income of the person of the year of income of the

person under section 102AAZD.

"(2) A person who contravenes subsection (1) is guilty of an offence

punishable on conviction by a fine not exceeding $3,000.

"(3) A person who is required by this section to keep records must:

(a) keep the records in writing in the English language or so as to enable

the records to be readily accessible and convertible into writing in the

English language; and

(b) keep the records so as to enable the person's liability under this Act

to be readily ascertained.

"(4) This section does not require a person to keep a record of information

if:

(a) the person did not know, and had no reasonable grounds to suspect, that

the person was an attributable taxpayer of the kind mentioned in subsection

(1); or

(b) the person did not know that, and made all reasonable efforts to

ascertain whether, the person was an attributable taxpayer as mentioned in

subsection (1); or

information.

"(5) Subject to subsections (6) and (7), the following provisions apply to a

partnership as if the partnership were a person:

(a) subsections (1) to (4) (inclusive) of this section;

(b) subsections 262A (4) and (5), in so far as those subsections apply to

records kept under or for the purposes of this section;

Part of that Act relates to the provisions covered by paragraph (a) or (b) of

this subsection.

"(6) Where, by virtue of subsection (5), an offence is taken to have been

committed by a partnership, that offence is taken to have been committed by

each of the partners.

"(7) In a prosecution of a person for an offence by virtue of subsection

(6), it is a defence if the person proves that the person:

(a) did not aid, abet, counsel or procure the act or omission by virtue of

which the offence was taken to have been committed; and

(b) was not in any way, by act or omission, directly or indirectly,

knowingly concerned in, or party to, an act or omission by virtue of which the

offence is taken to have been committed.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 19

Loans etc. to shareholders and associates deemed to be dividends

19. Section 108 of the Principal Act is amended by inserting after

subsection (2) the following subsections:

"(2A) In spite of anything in any other provision of this section, if:

(a) a company has profits immediately before a distribution time for a

distribution benefit in relation to the company; and

(b) the distribution time occurred after 3 June 1990; and

(d) the first company is a resident of an unlisted country at the

distribution time; and

(e) apart from this subsection, an amount deemed by this section to be a

dividend paid by the company would include an amount (in this subsection

called the `eligible distributed amount') that represents the whole or a part

of so much of the distribution payment as does not exceed the amount of those

profits;

then, the eligible distributed amount is not deemed by this section to be a

dividend paid by the company.

"(2B) An expression used in subsection (2A) of this section and in section

47A has the same meaning in that subsection as it has in that section.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 20

Interpretation

20. Section 110 of the Principal Act is amended:

(a) by omitting "or" from subparagraph (b) (ii) of the definition of

"AD/RLA policy" in subsection (1);

(b) by adding at the end of paragraph (b) of the definition of "AD/RLA

policy" in subsection (1) the following word and subparagraph:

"or (iv) an eligible non-resident policy;";

policy" in the definition of "CS policy" in subsection (1);

(d) by inserting "or an eligible non-resident policy" after "eligible

policy" in the definition of "NCS policy" in subsection (1);

(e) by inserting "a policy (other than an eligible non-resident policy)

that is" after "means" in the definition of "RA policy" in subsection (1);

(f) by inserting in subsection (1) the following definition:

" `eligible non-resident policy' means a life assurance policy that is:

(a) issued by a life assurance company in the course of a business carried

on by the company at or through a permanent establishment of the company in a

foreign country; and

(b) vested in an entity (within the meaning of Part X):

(i) who is not an associate (within the meaning of Part X) of the company;

and

(ii) who is not a Part X Australian resident (within the meaning of Part

X);".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 21

Deductions to be allowable for expenditure incurred in

gaining superannuation premiums

21. Section 111A of the Principal Act is amended by adding at the end the

following subsection:

"(2) Subsection (1) does not apply to superannuation premiums that are:

(a) received in respect of eligible non-resident policies; or

(b) exempt from tax under section 23AH.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 22

Deductions to be allowable for expenditure incurred in

gaining the investment component of certain premiums

22. Section 111AA of the Principal Act is amended by adding at the end of

subsection (1) the following word and paragraphs:

"or (d) premiums received in respect of eligible non-resident policies; or

(e) premiums exempt from tax under section 23AH.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 23

Exemption of income attributable to certain policies

etc.

23. Section 112A of the Principal Act is amended:

(a) by inserting in subsection (1) "and eligible non-resident policies"

after "exempt policies";

(b) by inserting in subsection (2) "(other than eligible non-resident

policies)" after "not to include policies".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 24

Repeal of section 112B

24. Section 112B of the Principal Act is repealed.

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 25

Notional Part IIIA disposals of fund assets

25. Section 116CB of the Principal Act is amended by inserting in subsection

(2) "or eligible non-resident policies" after "exempt policies".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 26

Amount of assessable income in particular class

26. Section 116CE of the Principal Act is amended by inserting in subsection

(5) "or eligible non-resident policies" after "exempt policies".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 27

Consequential adjustments to assessable income and allowable deductions

27. Section 136AF of the Principal Act is amended by inserting after

subsection (1) the following subsection:

"(1A) Subsection (1) also has the effect that it would have if the reference

in that subsection to the application of section 136ad in relation to a

taxpayer included references to:

(a) the application of section 136AD in accordance with section 102AAZA for

the purpose of calculating the attributable income of a trust estate; and

(b) the application of section 136AD in accordance with section 400 for the

purpose of calculating the attributable income of a CFC.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 28

Interpretation

28. Section 160AE of the Principal Act is amended:

(a) by omitting from subsection (1) the definition of "underlying tax" and

substituting the following definition:

" `underlying tax' means foreign tax payable on the

taxable profits of a company;";

(b) by omitting from subsection (1) the definition of "profits";

" `attributable income' has the same meaning as in

Part X;

`attributed tax account debit' has the same meaning

as in Part X;

`attribution account entity' has the same meaning as

in Part X;

`attribution account payment' has the same meaning

as in Part X;

`attribution percentage' has the same meaning as in

Part X;

`attribution surplus' has the same meaning as in

Part X;

`CFC' has the same meaning as in Part X;

`CFC-type foreign tax' means foreign tax in respect

of amounts that correspond to those included in assessable income under

section 456;

`distributable profits' has the same meaning as in

Part X;

`exempting profits' has the same meaning as in Part X;

`exempting profits percentage' has the same meaning

as in Part X;

`exempting receipt' has the same meaning as in Part X;

`listed country' has the same meaning as in Part X;

`modified passive income' has the meaning given by

subsection 160AEA (2);

`non-exempting profits', in relation to a company in

relation to a taxpayer, means distributable profits of the company other than

exempting profits of the company in relation to the taxpayer;

`non-portfolio dividend' has the same meaning as in

Part X;

`notional allowable deduction' has the same meaning

as in Part X;

`passive income' has the meaning given by subsection

160AEA (1);

`resident of a listed country' has the same meaning

as in Part X;

`resident of an unlisted country' has the same

meaning as in Part X;

`statutory accounting period' has the same meaning

as in Part X;

`taxable profits', in relation to a company, means

income and profits or gains, whether of an income or capital nature, of the

company on which foreign tax is payable;

`unlisted country' has the same meaning as in Part X.";

(d) by inserting in subsection (2) "or gains" after "profits" (wherever

occurring);

(e) by inserting in subsection (2) "(other than section 160AFD)" after

"Division";

(f) by adding at the end the following subsections:

"(7) For the purposes of this Division, and for the purposes of the

application of section 6AB to this Division, each listed country and each

unlisted country is to be treated as a separate foreign country.

"(8) For the purposes of this Division, underlying tax relates to

distributable profits of a company to the extent that the taxable profits of

the company on which the underlying tax is payable are attributable to the

distributable profits.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 29

29. After section 160AE of the Principal Act the following section is

inserted:

Passive income

"160AEA. (1) In this Division:

`passive income', in relation to a taxpayer, in relation to a year of income,

means:

(a) dividends (within the meaning of section 6) paid to the taxpayer in the

year of income; or

(b) unit trust dividends (within the meaning of Division 6B or 6C) paid to

the taxpayer in the year of income; or

distribution is taken to be a dividend because of section 47; or

(d) an amount that is taken to be a dividend paid to the company in the

year of income because of section 47A or 108; or

(e) interest income derived by the taxpayer in the year of income; or

(f) annuities derived by the taxpayer in the year of income; or

(g) rental income derived by the taxpayer in the year of income; or

(h) royalties derived by the taxpayer in the year of income; or

(j) an amount derived by the taxpayer in the year of income as

consideration for the assignment, in whole or in part, of any copyright,

patent, design, trade mark or other like property or right; or

(k) profits of a capital nature that accrued to the taxpayer in the year of

income; or

(m) passive commodity gains that accrued to the taxpayer in the year of

income; or

(n) an amount included in the assessable income of the taxpayer of the year

of income under section 102AAZD, 456, 457, 458 or 459;

but does not include offshore banking income.

"(2) In this Division:

`modified passive income', in relation to a taxpayer, in relation to a year of

income, means amounts that would be passive income of the taxpayer of the year

of income if that passive income did not include interest income of the

taxpayer of the year of income.

"(3) In this section:

`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;

`passive commodity gain', in relation to a taxpayer, in relation to a year of

income, means a gain realised by the taxpayer in a year of income from

disposing of a passive commodity investment;

`passive commodity investment', in relation to a taxpayer, 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 both of the following conditions are satisfied:

(i) a business of producing or processing the commodity; or

(ii) a business that involves the use of the commodity as a raw material in

a production process;

(d) the contract, right or option relates to the carrying on of that

business;

`rent' has the same meaning as in Part X;

`rental income' means income derived by way of rent.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 30

Credits in respect of foreign tax

30. Section 160AF of the Principal Act is amended by omitting paragraph (7)

(a) and substituting the following paragraph:

"(a) passive income;".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 31

Certain dividends deemed to be interest income

31. Section 160AFA of the Principal Act is amended by omitting from

subsection (1A) and paragraph (2) (b) "total profits derived during" and

substituting "distributable profits in relation to".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 32

Foreign underlying tax

32. Section 160AFC of the Principal Act is amended:

(a) by omitting from paragraph (2) (b) "out of the" and substituting "that

relates to the distributable";

(b) by omitting the definition of component C in the formula in subsection

(2) and substituting the following definition:

"C is the number of whole dollars in the

distributable profits out of which the dividend has been paid.";

subsection (4) and substituting the following definitions:

"B is the amount (if any) of underlying tax paid

by the paying company that relates to the distributable profits out of which

the dividend has been paid;

C is the amount (if any) of foreign tax deemed to

have been paid by the paying company by any other application or applications

of this subsection in relation to the dividend series; and

D is the number of whole dollars in the

distributable profits out of which the dividend has been paid.";

(d) by inserting after subsection (5) the following subsection:

"(5A) Where the dividend is in whole or in part:

(a) an exempting receipt of a company in relation to an accounting period

in relation to the Australian company; or

(b) an exempting receipt of the Australian company;

then, in determining the foreign tax (if any) that the Australian company is

taken, because of this section, to have paid, and to have been personally

liable for, in respect of the dividend:

reference to so much of the dividend as is not an exempting receipt; and

(d) a reference in subsection (2) or (4) to the amount of the underlying

tax that relates to the distributable profits out of which the dividend has

been paid is a reference to:

(i) where the dividend is paid by a company (in this subparagraph called

the `paying company') that is a resident of a listed country - the amount

calculated using the formula:

Attribution + (General x Attribution)

surplus (tax surplus )

tax ( percent )

where:

Attribution surplus tax means so much of the underlying tax as relates

exclusively to the part of the distributable profits that is attributable to

any attribution surplus, immediately before the payment of the dividend, for

the paying company in relation to the Australian company;

General tax means so much of the underlying tax as does not relate exclusively

to the part of the attributable profits attributable to that attribution

surplus or exclusively to the remainder of the distributable profits;

Attribution surplus percent means the percentage of the general tax that may

reasonably be related to the part of the distributable profits that is

attributable to that attribution surplus; or

(ii) in any other case - the amount calculated using the formula:

Non-exempting + (General x Non-exempting)

tax (tax percent )

where:

Non-exempting tax means so much of the underlying tax as relates exclusively

to non-exempting profits, in relation to the Australian company, forming part

of the distributable profits;

General tax means so much of the underlying tax as does not relate exclusively

to non-exempting profits in relation to the Australian company, or exclusively

to exempting profits in relation to the Australian company, forming part of

the distributable profits;

Non-exempting percent means the percentage of the General tax that may

reasonably be related to non-exempting profits, in relation to the Australian

company, forming part of the distributable profits; and

(e) a reference in subsection (2) or (4) to the amount of the distributable

profits out of which the dividend has been paid is a reference to:

(i) where the dividend is paid by a company that is a resident of a listed

country - so much of those distributable profits as is attributable to any

attribution surplus, for the latter company in relation to the Australian

company, existing immediately before the dividend is paid; or

(ii) in any other case - any non-exempting profits, in relation to the

Australian company, that form part of those distributable profits.";

(e) by inserting in subsections (6) and (7) "distributable" before

"profits" (wherever occurring);

(f) by omitting subsections (10) and (11) and substituting the following

subsection:

"(10) In this section:

`accounting period' means an accounting period used by the company in the

accounts by reference to which it distributes dividends.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 33

33. After section 160AFC of the Principal Act the following sections are

inserted:

Foreign tax in respect of amounts assessable under section 456

"160AFCA. If:

(a) an amount (in this section called the `section 456 amount') is included

in the assessable income of a taxpayer, being a company, of a year of income

under section 456 in respect of the taxpayer's attribution percentage of the

attributable income of a CFC for a statutory accounting period; and

(b) at the end of the statutory accounting period, the CFC was related to

the taxpayer;

then 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 456 amount,

in the year of income, an amount of foreign tax equal to the attribution

percentage of the total amount of the notional allowable deductions under

section 393 in relation to the attributable income of the CFC for the

statutory accounting period.

Foreign tax in respect of amounts assessable under section 457

"160AFCB. If:

(a) an amount (in this section called the `section 457 amount') is included

in the assessable income of a taxpayer, being a company, of a year of income

under section 457 as a result of a change of residence at a particular time

(in this section called the `residence-change time') by a CFC; and

(b) at the residence-change time, the CFC was related to the taxpayer;

the following provisions have effect:

and to have been personally liable for, in respect of the section 457 amount,

in the year of income, an amount of foreign tax equal to the total foreign tax

and Australian tax paid by the CFC that is attributable to the section 457

amount;

(d) if the section 457 amount is attributable in whole or part to a

non-portfolio dividend paid to the CFC by a foreign company that, at the time

of the payment of the dividend, was related to the taxpayer - 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 457 amount, in the year of

income, an amount of foreign tax equal to the taxpayer's attribution

percentage, at the residence-change time, of the amount (if any) of foreign

tax that the CFC would have been taken to have paid, and to have been

personally liable for, because of section 160AFC, in respect of the whole or

the part of the dividend if:

(i) the CFC had been an Australian company at the time of the payment of

the dividend; and

(ii) it were a requirement of that section (in addition to the other

requirement of that section), for companies to be a pair of companies in a

dividend series, that they be related to the taxpayer referred to in this

section.

Foreign tax in respect of amounts assessable under section 458

"160AFCC. If:

(a) an amount (in this section called the `section 458 amount') is included

in the assessable income of a taxpayer, being a company, of a year of income

under section 458 in respect of a dividend paid by a CFC to another CFC; and

(b) at the time of the payment of the dividend, both CFCs were related to

the taxpayer;

then 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 458 amount,

in the year of income, an amount of foreign tax equal to the sum of the

following amounts:

tax (other than under a tax law of the listed or unlisted country of which the

CFC is a resident) in respect of the dividend - the amount calculated using

the following formula:

Foreign tax

Section 458 amount x -----------

Dividend

where:

Section 458 amount means the section 458 amount;

Foreign tax means the amount of the foreign tax;

Dividend means the amount of the dividend;

(d) the amount calculated using the formula:

Section 458 amount

160AFC deemed tax x ------------------

Dividend - Exempting profits part

where:

160AFC deemed tax means the amount (if any) of foreign tax that the CFC to

which the dividend is paid would have been taken to have paid, and to have

been personally liable for, because of section 160AFC, in respect of the

dividend if:

(i) the CFC had been an Australian company at the time of the payment of

the dividend; and

(ii) it were a requirement of that section (in addition to the other

requirement of that section), for companies to be a pair of companies in a

dividend series, that they be related to the taxpayer referred to in this

section; and

(iii) for the purpose of applying subsection 160AFC (2) or (4) in the case

where the paying company referred to in that subsection is the CFC that paid

the dividend, the reference in component B of the formula in that subsection

to underlying tax included a reference to amounts that would be underlying tax

if Australian tax were foreign tax;

Section 458 amount means the section 458 amount;

Dividend means the amount of the dividend;

Exempting profits part means the exempting profits percentage, in relation to

the taxpayer, of the dividend.

Foreign tax in respect of amounts exempt under section 23AI

"160AFCD. If an attribution account payment made to a resident taxpayer by

an attribution account entity in a year of income is, in whole or in part

(which whole or part is in this section called the `section 23AI exempt

part'), exempt from tax under section 23AI, the following provisions have

effect:

(a) the section 23AI exempt part is taken, for the purposes of paragraph

160AF (1) (a) but not (d), to be included in the assessable income of the

taxpayer of the year of income;

(b) 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 23AI exempt

part, in the year of income, an amount of foreign tax calculated using the

formula:

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

where:

EP (Exempt Percentage) means the percentage of the attribution account payment

represented by the section 23AI exempt part;

DT (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

attribution account payment;

AEP (Adjusted Exempt Percentage) means the percentage that would be formula

component EP if the attribution account payment were reduced by any part of

that payment that is exempt under section 23AJ;

UT (Underlying Tax) means any foreign tax (other than CFC-type 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

section 160AFC in respect of the attribution account payment;

AT (Attributed Tax) means the amount of any attributed tax account debit

arising for the attribution account entity in relation to the taxpayer on the

making of the attribution account payment, to the extent that the amount of

the debit does not exceed the amount of the formula component AEP x UT.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 34

34. Section 160AFD of the Principal Act is repealed and the following

section is substituted:

Losses of previous years

"160AFD. (1) Where a resident taxpayer has incurred one or more overall

foreign losses in respect of a class of assessable foreign income in respect

of any of the 7 pre-1990 years of income before a particular year of income,

the amount that, but for this section, would be the taxpayer's assessable

foreign income of that class of the particular year of income is, for the

purposes of this Act, reduced by an amount calculated using the formula:

Total loss - Recouped loss

where:

Total loss means the amount of the loss, or the sum of the amounts of the

losses;

Recouped loss means so much of the Total loss as has been taken into account,

in any previous application of this subsection, in reducing the taxpayer's

assessable foreign income of that class.

"(2) Where a resident taxpayer has incurred one or more overall foreign

losses in respect of a class of assessable foreign income in respect of any of

the post- 1989 years of income before a particular year of income, the amount

that, but for this section, would be the taxpayer's assessable foreign income

of that class of the particular year of income is, for the purposes of this

Act, reduced by an amount calculated using the formula:

Total loss - Recouped loss

where:

Total loss means the amount of the loss, or the sum of the amounts of the

losses;

Recouped loss means so much of the Total loss as has been taken into account,

in any previous application of this subsection, in reducing the taxpayer's

assessable foreign income of that class.

"(3) Where, because of the application of either subsection (1) or (2) or of

both subsections (1) and (2), a taxpayer's assessable foreign income of a

particular class of a year of income is to be reduced by 2 or more losses, the

losses are to be taken into account in accordance with the following

principles:

(a) any loss or losses under subsection (1) are to be taken into account

before any under subsection (2);

(b) any losses under the same subsection are to be taken into account in

the order in which they were incurred.

"(4) Where the amount of a taxpayer's assessable foreign income of a

particular class of a year of income is reduced under subsection (1) or (2),

any foreign tax paid by the taxpayer in respect of the amount is, for the

purposes of this Act, to be calculated as if the amount were so reduced.

"(5) This section has effect whether or not the law of the foreign country

concerned allows the income of a taxpayer of a particular year to be reduced

because of losses incurred in previous years.

"(6) Where:

(a) apart from this subsection, an overall foreign loss in respect of a

class of assessable foreign income incurred by a taxpayer in respect of a year

of income would be taken into account for the purpose of applying subsection

(1) or (2) in relation to the particular year of income referred to in that

subsection; and

(b) if that loss were a loss incurred by the taxpayer within the meaning of

section 80, it would not, because of section 80A or 80DA, be taken into

account for the purpose of applying section 80 in relation to the particular

year of income;

then the overall foreign loss is not to be taken into account for the purpose

of applying subsection (1) or (2) of this section in relation to the

particular year of income.

"(7) Where:

(a) there are one or more foreign income deductions of a taxpayer in

relation to a class of assessable foreign income in relation to a year of

income; and

(b) either:

(i) the taxpayer did not derive any assessable foreign

income of that class during the year of income; or

(ii) the taxpayer derived assessable foreign income of that

class during the year of income and its amount is exceeded by the sum of the

foreign income deductions;

the taxpayer is taken, for the purposes of this section, to have incurred an

overall foreign loss in respect of the class of assessable foreign income for

the year of income equal to:

(d) where subparagraph (b) (ii) applies - the amount of the excess referred

to in that subparagraph.

"(8) For the purposes of this section, each of the following kinds of

assessable foreign income constitutes a single class:

(a) interest income;

(b) modified passive income;

(d) all other assessable foreign income.

"(9) In this section:

`assessable foreign income', in relation to a taxpayer in relation to a year

of income, means:

(a) foreign income that is included in the assessable income of the

taxpayer of the year of income; or

(b) where:

(i) during the year of income, the taxpayer derives a profit or gain of a

capital nature from sources in a foreign country; and

(ii) the whole or part of the profit or gain is included in the assessable

income of the taxpayer of the year of income other than under Part IIIA;

the whole or the part of the profit or gain;

`foreign income deduction', in relation to a taxpayer in relation to a class

of assessable foreign income in relation to a year of income, means any

deduction that, disregarding section 79D, is allowed or allowable from the

assessable income of the taxpayer of the year of income, to the extent that

the deduction relates to assessable foreign income of that class of any year

of income;

`post-1989 year of income' means the year of income commencing on 1 July 1989

or any later year of income;

`pre-1990 year of income' means any year of income before the year of income

commencing on 1 July 1989.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 35

Carry-forward and transfer of excess credits

35. Section 160AFE of the Principal Act is amended:

(a) by omitting subsection (1) and substituting the following subsections:

"(1) If:

(a) there is an initial credit shortfall for a

class of income of a taxpayer in relation to a year of income (in this

subsection called the `current year of income'); and

(b) either or both of the following conditions are

satisfied:

(i) there is a post-transfer excess credit

balance for the class of income of the taxpayer in relation to one or more

earlier years of income that is available for the current year of income;

(ii) one or more amounts that relate to that

class of income have been transferred to the taxpayer under subsection (1D)

for utilisation in the current year of income;

the taxpayer is to be taken to have utilised the following amounts, in the

following order, in the current year of income, to successively increase the

amount ascertained under paragraph 160AF (1) (c) (in the application of that

paragraph to the class of income of the taxpayer in relation to the current

year of income) to an amount not exceeding the Australian tax upper limit for

the class of income of the taxpayer in relation to the current year of

income:

the class of income of the taxpayer in relation to the fifth year of income

before the current year of income, being the balance that is available for the

current year of income;

(d) the post-transfer excess credit balance for

the class of income of the taxpayer in relation to the fourth year of income

before the current year of income, being the balance that is available for the

current year of income;

(e) the post-transfer excess credit balance for

the class of income of the taxpayer in relation to the third year of income

before the current year of income, being the balance that is available for the

current year of income;

(f) the post-transfer excess credit balance for

the class of income of the taxpayer in relation to the second year of income

before the current year of income, being the balance that is available for the

current year of income;

(g) the post-transfer excess credit balance for

the class of income of the taxpayer in relation to the year of income before

the current year of income, being the balance that is available for the

current year of income;

(h) any amounts that relate to that class of

income and that have been transferred to the taxpayer under subsection (1D)

for utilisation in the current year of income.

"(1A) For the purposes of the application of this

section in relation to a taxpayer, if:

(a) all of the foreign income derived by the

taxpayer in a year of income consists of income of a single class (within the

meaning of subsection 160AF (7)); and

(b) section 160AF applies in relation to the

taxpayer in relation to the year of income;

section 160AF is to be taken to apply in relation to

that income as if the income were income of a particular class.

"(1B) For the purposes of the application of this

section in relation to a taxpayer, if section 160AF applies in relation to a

particular class of income of the taxpayer in relation to a year of income:

(a) the amount ascertained under paragraph 160AF

(1) (c) in that application (apart from this section) is the original foreign

tax upper limit for the class of income of the taxpayer in relation to the

year of income; and

(b) the amount ascertained under paragraph 160AF

(1) (d) in that application is the Australian tax upper limit for the class of

income of the taxpayer in relation to the year of income; and

the class of income of the taxpayer in relation to the year of income exceeds

the Australian tax upper limit for the class of income of the taxpayer in

relation to the year of income - the amount of the excess is the initial

excess credit for the class of income of the taxpayer in relation to the year

of income; and

(d) if the original foreign tax upper limit for

the class of income of the taxpayer in relation to the year of income falls

short of the Australian tax upper limit for the class of income of the

taxpayer in relation to the year of income - the amount of the shortfall is

the initial credit shortfall for the class of income of the taxpayer in

relation to the year of income.

"(1C) For the purposes of the application of this

section in relation to a taxpayer, if there is an initial excess credit for a

class of income of the taxpayer in relation to a year of income (in this

subsection called the `original year of income'):

(a) the opening excess credit balance for the

class of income of the taxpayer in relation to the original year of income

that is available for a later year of income (in this paragraph called the

`current year of income'), being one of the 5 years of income after the

original year of income, is:

(i) if the current year of income is the first

year of income after the original year of income - the initial excess credit,

reduced by so much of the initial excess credit as is transferred by the

taxpayer under subsection (1D) for utilisation in the original year of income;

(ii) if the current year of income is a later

year of income - the closing excess credit balance for the class of income of

the taxpayer in relation to the original year of income that is available for

the previous year of income; and

(b) the post-transfer excess credit balance for the

class of income of the taxpayer in relation to the original year of income

that is available for a later year of income (in this paragraph called the

`current year of income'), being one of the 5 years of income after the

original year of income, is the opening excess credit balance for the class of

income of the taxpayer in relation to the original year of income that is

available for the current year of income, reduced by so much of that opening

excess credit balance as is transferred by the taxpayer under subsection (1D)

for utilisation in the current year of income; and

of income of the taxpayer in relation to the original year of income that is

available for a later year of income (in this paragraph called the `current

year of income'), being one of the 5 years of income after the original year

of income, is the post-transfer excess credit balance for the class of income

of the taxpayer in relation to the original year of income that is available

for the current year of income, reduced by so much of that post-transfer

excess credit balance as is taken to have been utilised in the current year of

income under subsection (1).

"(1D) For the purposes of this section, if:

(a) either of the following conditions are

satisfied in relation to an Australian company (in this section called the

`credit company') in relation to a year of income (in this subsection called

the `current year of income'):

(i) the credit company has an initial excess

credit in relation to a class of income of the Australian company in relation

to the current year of income;

(ii) the credit company has an opening excess

credit balance for a class of income of the credit company in relation to a

year of income earlier than the current year of income, being a balance that

is available for the current year of income; and

(b) section 160AF applies in relation to that

class of income of an Australian company (in this section called the `income

company') of the current year of income, being a company that is a group

company in relation to the credit company in relation to the current year of

income; and

the Commissioner, on or before the date of lodgment of the return of income of

the income company for the current year of income or within such further time

as the Commissioner allows, a notice in writing signed by the public officer

of each of those companies, stating that the whole or a specified part of:

(i) the initial excess credit; or

(ii) the opening excess credit balance;

as the case may be, should be transferred to the

income company for utilisation in the current year of income;

the notice gives effect to the transfer concerned.

"(1E) Subsection (1D) applies only to the

following 2 classes of income:

(a) passive income;

(b) all other income other than offshore banking

income.";

(b) by omitting subsections (7) and (8).

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 36

Penalty for false or misleading statements

36. Section 160AS of the Principal Act is amended by adding at the end of

subsection (2) "or 264A (1) (d) or (e)".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 37

What constitutes a disposal or acquisition

37. Section 160M of the Principal Act is amended:

(a) by inserting after subsection (12) the following subsections:

"(12A) Subsection (12) does not apply where a

company that is a CFC ceases to be a resident of an unlisted country or a

listed country and becomes a resident within the meaning of section 6.

"(12B) In subsection (12A):

`CFC' has the same meaning as in Part X;

`resident of a listed country' has the same meaning

as in Part X;

`resident of an unlisted country' has the same

meaning as in Part X.";

(b) by inserting after subsection (13) the following subsection:

"(13A) Subsection (13) does not apply where a trust estate becomes a resident

trust estate if, immediately before it does so, it is a CFT, within the

meaning of section 342, because paragraph (a) of that section applies.";

"(14A) Subsection (14) does not apply where a unit trust becomes a resident

unit trust if, immediately before it does so, it is a CFT, within the meaning

of section 342, because paragraph (a) of that section applies.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 38

Capital gains and capital losses

38. Section 160Z of the Principal Act is amended:

(a) by inserting in subsection (6) and paragraph (9) (c) "eligible" before

"exempt";

(b) by adding at the end the following subsection:

"(10) in this section:

`eligible exempt income' means exempt income other than income to which

section 23AH, 23AI or 23AJ or paragraph 99B (2) (d) or (e) applies.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 39

39. After section 160ZF of the Principal Act the following section is

inserted:

Adjustment where section 47A applies to rolled-over assets

"160ZFA. Where:

(a) either:

(i) because of Division 17, this Part does not apply to the disposal of an

asset by a person (in this section called the `transferor') to another person

(in this section called the `transferee'); or

(ii) because of Division 17, in its application in accordance with Division

7 of Part X, this Part does not apply, for the purpose of calculating the

attributable income of a company under that Division in relation to any

taxpayer, to the disposal of an asset by the CFC (in this section also called

the `transferor') to another person (in this section also called the

`transferee'); and

(b) section 47A applies in relation to the disposal of the asset to deem

the transferor to have paid a dividend to the transferee; and

(i) the whole or part of the deemed dividend is included in the assessable

income of the transferee under section 44; or

(ii) an amount in respect of the deemed dividend is included in the

assessable income of another taxpayer under section 458 or 459; and

(d) the transferee subsequently disposes of the asset;

then, for the purposes of this Part, the consideration in respect of the

subsequent disposal is taken to be reduced by the lesser of:

(e) the amount of the deemed dividend; and

(f) the amount of any capital gain that, disregarding Division 17, would

have accrued to the transferor:

(i) where subparagraph (a) (i) applies - under this Part; or

(ii) where subparagraph (a) (ii) applies - under this Part in its

application for the purpose of calculating the attributable income of the

transferor in relation to the taxpayer;

in respect of the disposal referred to in subparagraph (a) (i) or (ii) if the

consideration in respect of the disposal had been equal to the market value of

the asset at the time of that disposal.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 40

Return of capital on investment in trust

40. Section 160ZM of the Principal Act is amended by inserting after

subsection (1) the following subsection:

"(1A) Section 23AI and paragraphs 99B (2) (d) and (e) are to be disregarded

in determining whether an amount is assessable income of the taxpayer for the

purposes of subsection (1) of this section.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 41

Transfer of asset from company or trust to spouse upon

breakdown of marriage

41. Section 160ZZMA of the Principal Act is amended by inserting after

subsection (3) the following subsections:

"(3A) If:

(a) there is a requirement to calculate under Division 7 of Part X the

attributable income of a company in relation to any taxpayer; and

(b) this section, as it has effect in accordance with that Division, is

relevant to that calculation because both of the following subparagraphs

apply:

(i) the company is the first taxpayer;

(ii) apart from the residency assumption mentioned in that Division, the

disposal of the asset concerned is not a disposal of a taxable Australian

asset;

then, in addition to the effect that this section has apart from this

subsection, this section also has the effect, in relation to any subsequent

disposal of the asset (whether by the spouse or otherwise) that it would have

if it had applied in relation to the spouse subject to the modifications made

by that Division.

"(3B) If:

(a) there is a requirement to calculate under section 102AAU the

attributable income of a non-resident trust estate of a year of income; and

(b) this section, as it has effect in accordance with Subdivision D of

Division 6AAA of Part III, is relevant to that calculation because both of the

following subparagraphs apply:

(i) the trustee of the trust estate is the first taxpayer;

(ii) apart from the assumptions about residency that apply for the purposes

of that Subdivision, the disposal of the asset concerned is not a disposal of

a taxable Australian asset;

then, in addition to the effect that this section has apart from this

subsection, this section also has the effect, in relation to any subsequent

disposal of the asset (whether by the spouse or otherwise) that it would have

if it had applied in relation to the spouse subject to the modifications made

by that Subdivision.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 42

Transfer of asset between companies in the same group

42. Section 160ZZO of the Principal Act is amended by inserting before

subsection (3) the following subsection:

"(2D) If:

(a) there is a requirement to calculate under Division 7 of Part X the

attributable income of a company in relation to any taxpayer; and

(b) this section, as it has effect in accordance with that Division, is

relevant to that calculation because both of the following subparagraphs

apply:

(i) the company is the transferor;

(ii) apart from the residency assumption mentioned in that Division, the

disposal of the asset concerned is not a disposal of a taxable Australian

asset;

then, in addition to the effect that this section has apart from this

subsection, this section also has the effect, in relation to any subsequent

disposal of the asset (whether by the transferee or otherwise) that it would

have if it had applied in relation to the transferee subject to the

modifications made by that Division.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 43

Transfer of asset from subsidiary to holding company

for no consideration

43. Section 160ZZOA of the Principal Act is amended by inserting before

subsection (3) the following subsection:

"(2A) If:

(a) there is a requirement to calculate under Division 7 of Part X the

attributable income of a company in relation to any taxpayer; and

(b) this section, as it has effect in accordance with that Division, is

relevant to that calculation because both of the following subparagraphs

apply:

(i) the company is the transferor;

(ii) apart from the residency assumption mentioned in that Division, the

disposal of the asset concerned is not a disposal of a taxable Australian

asset;

then, in addition to the effect that this section has, apart from this

subsection, this section also has the effect, in relation to any subsequent

disposal of the asset (whether by the transferee or otherwise) that it would

have if it had applied in relation to the transferee subject to the

modifications made by that Division.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 44

Commissioner may collect tax from person owing money to taxpayer

44. Section 218 of the Principal Act is amended by inserting "102AAM or"

before "170AA" in paragraph (ba) and subparagraph (c) (iv) of the definition

of "tax" in subsection (6B).

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 45

Assessment where no administration

45. Section 220 of the Principal Act is amended:

(a) by inserting after paragraph (1) (a) the following paragraph:

"(aa) interest under section 102AAM to which the

taxpayer is liable has not been assessed or paid; or";

(b) by omitting subsection (8) and substituting the following subsection:

"(8) In this section, unless the contrary

intention appears:

`tax' includes:

(a) interest under section 102AAM; and

(b) additional tax under Part VII.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 46

Penalty for false or misleading statements

46. Section 223 of the Principal Act is amended by omitting from subsection

(8) all the words after "but does not include a statement made" and

substituting the following words and paragraphs:

"in:

(e) a document produced pursuant to paragraph 264 (1) (b) or 264A (1) (d)

or (e) (other than a document containing particulars of the basis of the

calculation of taxable income of a year of income and the tax payable in

respect of that taxable income that were specified in a return in accordance

with section 221AZD); or

(f) a document produced pursuant to subparagraph 451 (2) (c) (ii) or

paragraph 453 (1) (e).".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 47

Interpretation

47. Section 251R of the Principal Act is amended by inserting in subsection

(7) "section 102AAN," after "subsection 6 (1),".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 48

48. After section 264 of the Principal Act the following section is

inserted:

Offshore information notices

"264A. (1) Where the Commissioner has reason to believe that:

(a) information relevant to the assessment of a taxpayer is:

(i) within the knowledge (whether exclusive or otherwise) of a person

outside Australia; or

(ii) recorded (whether exclusively or otherwise) in a document outside

Australia; or

(iii) kept (whether exclusively or otherwise) by means of a mechanical,

electronic or other device outside Australia; or

(b) documents relevant to the assessment of a taxpayer are outside

Australia (whether or not copies are in Australia or, if the documents are

copies of other documents, whether or not those other documents are in

Australia);

the Commissioner may, by notice in writing served on the taxpayer (which

notice is in this section called the `offshore information notice'), request

the taxpayer:

specified in the offshore information notice, any such information; or

(d) to produce to the Commissioner, within the period and in the manner

specified in the offshore information notice, any such documents; or

(e) to make copies of any such documents and to produce to the

Commissioner, within the period and in the manner specified in the offshore

information notice, those copies.

"(2) The period specified in the offshore information notice must end 90

days after the date of service of the notice.

"(3) Upon written application made by the taxpayer within the period

specified in the offshore information notice, the Commissioner may, by notice

in writing served on the taxpayer, extend the period specified in the offshore

information notice.

"(4) Where:

(a) an application under subsection (3) is made before the end of the

period specified in the offshore information notice; and

(b) at the end of the period, the Commissioner has not notified the

taxpayer of the Commissioner's decision on the application;

the following provisions have effect:

(3) to the end of the day (in this subsection called the `decision day') on

which the Commissioner's decision is notified to the taxpayer;

(d) if the Commissioner decides to extend the period - the extended period

must end after the decision day.

"(5) A reference in this section (other than subsection (3)) to the period

specified in the offshore information notice is a reference to the period as

extended under subsection (3).

"(6) Where:

(a) an offshore information notice (in this subsection called the `first

notice') was served on a taxpayer; and

(b) during the period specified in the first notice (including a period

specified by virtue of one or more previous applications of this subsection),

another offshore information notice (which other notice is in this subsection

called the `subsequent notice') is served on the taxpayer; and

first notice;

the following provisions have effect:

(d) the request, or each of the requests, set out in the subsequent notice

is taken, for the purposes of subsections (10), (11) and (14), to have been

set out in the first notice;

(e) if the period specified in the first notice would, apart from this

subsection, end before the end of the period specified in the subsequent

notice - the period specified in the first notice is taken to have been

extended under subsection (3) to the end of the period specified in the

subsequent notice.

"(7) The Commissioner may, by notice in writing served on the taxpayer, vary

the offshore information notice by:

(a) reducing its scope; or

(b) correcting a clerical error or obvious mistake;

and, if the Commissioner does so, a reference in this section to the offshore

information notice is to be read as a reference to the notice as so varied.

"(8) The Commissioner may withdraw an offshore information notice.

"(9) If the Commissioner withdraws an offshore information notice, nothing

in this section prevents the Commissioner giving another offshore information

notice in substitution, in whole or in part, for the withdrawn notice.

"(10) If the taxpayer refuses or fails to comply with the request or

requests set out in the offshore information notice, then, except with the

consent of the Commissioner:

(a) if the information or documents to which the request or requests apply

are only relevant to one issue concerning the assessment of the taxpayer:

(i) where the request, or any of the requests, apply to information - the

information is not admissible in proceedings disputing the taxpayer's

assessment; or

(ii) where the request, or any of the requests, apply to documents -

neither the documents, nor any secondary evidence of the documents, are

admissible in proceedings disputing the taxpayer's assessment; or

(b) if:

(i) the information or documents to which the request or requests apply are

relevant to 2 or more issues concerning the assessment of the taxpayer; and

(ii) the refusal or failure of the taxpayer relates to information or

documents that are relevant to any or all of those issues;

the following provisions have effect:

(iii) where the request, or any of the requests, apply to information - the

information, to the extent to which it is relevant to the issue or issues

mentioned in subparagraph (ii), is not admissible in proceedings disputing the

taxpayer's assessment;

(iv) where the request, or any of the requests, apply to documents -

neither:

(A) the documents, to the extent to which they are relevant to the issue or

issues mentioned in subparagraph (ii); nor

(B) secondary evidence of the documents, to the extent to which the

secondary evidence is relevant to the issue or issues mentioned in

subparagraph (ii);

are admissible in proceedings disputing the taxpayer's assessment.

"(11) Without limiting the power conferred by subsection (10), where:

(a) the taxpayer refuses or fails to comply with the request or requests

set out in the offshore information notice; and

(b) the refusal or failure of the taxpayer relates to some, but not all, of

the information or documents to which the request or requests apply and that

are relevant to a particular issue concerning the assessment of the taxpayer;

the Commissioner, in exercising that power, must have regard to whether there

is reason to believe that, because of the absence of that information or those

documents, the remaining information or documents that are relevant to that

issue are, or are likely to be, misleading.

"(12) The Commissioner, in exercising the power conferred by subsection

(10), must ignore the consequences (whether direct or indirect) of an

obligation arising under a law of, or of a part of, a foreign country, in so

far as that obligation relates to the secrecy of information or documents.

"(13) In spite of anything in this section, the Commissioner must give a

consent under subsection (10) in any case where a refusal would have the

effect, for the purposes of the Constitution, of making any tax or penalty

incontestable.

"(14) Where, before the commencement of the hearing of proceedings disputing

the taxpayer's assessment, the Commissioner forms both of the following

views:

(a) the view that the taxpayer has refused or failed to comply with the

request or requests set out in the offshore information notice;

(b) the view that the Commissioner is unlikely to give a consent under

subsection (10) in relation to that request or those requests and in relation

to those proceedings;

the Commissioner must serve on the taxpayer a notice in writing setting out

those views.

"(15) A failure to comply with subsection (14) does not affect the validity

of a decision under subsection (10).

"(16) A reference in this section to a refusal or failure of a taxpayer to

comply with a request includes a reference to a refusal or failure resulting

from the taxpayer being incapable of complying with the request.

"(17) A reference in this section to proceedings disputing the taxpayer's

assessment is a reference to proceedings before a court or the Tribunal

arising out of, or relating to, an objection against the assessment.

"(18) Nothing in this Act precludes an offshore information notice from

being set out in the same document as a notice under section 264.

"(19) An offshore information notice must set out the effect of subsection

(10).

"(20) A failure to comply with subsection (19) does not affect the validity

of the offshore information notice.

"(21) A request under this section is not taken to be a requirement for the

purposes of any other provision of this Act or of any provision of the

Taxation Administration Act 1953.

"(22) A refusal or failure to comply with a request set out in an offshore

information notice is not an offence.

"(23) The express references in this section to documents do not imply that

references to documents in any other provision of this Act, or in a provision

of the Taxation Administration Act 1953, do not have the meaning given by

section 25 of the Acts Interpretation Act 1901.

"(24) Nothing in this section affects the operation of section 264 and

nothing in section 264 affects the operation of this section.".

TAXATION LAWS AMENDMENT (FOREIGN INCOME) ACT 1990 No. 5 of 1991

- SECT 49

49. After section 315 of the Principal Act the following Part is inserted:

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

"Division 1 - Preliminary

Object of Part

"316. (1) The 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); and

"(2) 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);

attribution percentages (Division 3);

(d) attribution accounts (Division 4);

(e) attributed tax accounts (Division 5);

(f) exempting receipts etc. (Division 6);

(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).

Interpretation

"317. 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;

`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 bank within the meaning of the Banking Act 1959;

(b) a person who carries on State banking within the meaning of paragraph

51 (xiii) of the Constitution;

Corporations Act 1974;

(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' has the meaning given by section 375;

`attributed tax account debit' has the meaning given by section 376;

`attributed tax account surplus' has the meaning given by section 374;

`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

`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 meaning given by section 338; `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 section 160ZZF and Divisions 5A, 7A and 17 of

Part IIIA; `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;

`commodity investment' 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; `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;

`control tracing interest':

(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

`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' means a relationship between 2 persons who, although not

legally married to each other, live with each other on a bona fide domestic

basis as husband and wife;

`depreciation provision' means any of sections 54 to 62 of Division 3 of Part

III, or any provision of Divisions 10, 10AAA, 10AA, 10A, 10C and 10D of that

Part; `designated concession income', in relation to a particular listed

country, means income or profits of a kind specified in the regulations

where:

(a) either of the following subparagraphs applies:

(i) foreign tax imposed by a tax law of the listed country is not payable

in respect of the income or profits because of a particular feature;

(ii) foreign tax imposed by a tax law of the listed country is payable in

respect of the income or profits but there is a feature in relation to that

tax; and

(b) the feature is of a kind specified in the regulations; `direct

attribution account interest' has the meaning given by section 366; `direct

attribution interest' has the meaning given by section 356; `direct control

interest':

(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

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', in relation to an asset, includes redemption;

`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 Income Tax

(International 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

(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

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;

(d) any other person;

`exempting profits' has the meaning given by section 378;

`exempting profits percentage' has the meaning given by section 379;

`exempting receipt' has the meaning given by section 377 (in relation to a

company that is a resident of an unlisted country) or section 380 (in

relation to a company that is a resident within the meaning of section 6);

`factoring income' means income derived from carrying on a business of

factoring;

`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;

`goods' includes:

(a) ships, aircraft and other vehicles; and

(b) animals, including fish; and

not; and

(d) gas and electricity;

`grossed-up amount' 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; `group' includes:

(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' has the same meaning as in section 110;

`life assurance policy' has the same meaning as in section 110;

`life assurance premiums' means premiums (within the meaning of section 110)

in respect of life assurance policies;

`listed country' has the meaning given by section 320;

`member of a non-portfolio company group' has the meaning given by section

334;

`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-discretionary trust' means a trust other than a discretionary trust;

`non-portfolio dividend' means a dividend paid to a company where that company

has a voting interest, within the meaning of section 160AFB, 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

the agreement, a resident solely of the foreign country;

`passive income' has the meaning given by section 446;

`premium income' means:

(a) premiums in respect of insurance or reinsurance;

(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;

`provide', in relation to services, includes allow, confer, give, grant or

perform;

`public unit trust' has the meaning given by section 329;

`recognised accounts':

(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

a vessel or boat of any description, and includes:

(a) an air-cushion vehicle; and

(b) any floating structure; `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

(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 gain realised by the company in the statutory

accounting period from disposing of a tainted commodity investment;

`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:

(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 loss realised by the company in the statutory

accounting period from disposing of a tainted commodity investment;

`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

but does not include offshore banking income within the meaning of Division 18

of Part III;

`tainted 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;

(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 the listed country, or of the unlisted country, as the case

may be;

(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 the listed country, or of the unlisted country, as the case

may be;

(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;

(ii) an aircraft;

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:

(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;

(ii) plant or equipment designed or intended for use on board ships;

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:

(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;

(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;

(ii) municipal foreign tax;

the law of the listed country or the unlisted country that imposes the federal

foreign tax; or

(b) in any other case - the law of the listed country or the unlisted

country that imposes foreign tax;

`trust' means:

(a) an entity in the capacity of trustee (including an entity that is taken

to be a trustee because of section 268); or

(b) as the case requires, a trust or trust estate;

`unlisted country' has the meaning given by section 320.

Associates

"318. (1) 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;

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

primary entity because of another application of this paragraph; or

(D) 2 or more entities covered by the

precedingsub-subparagraphs; or

(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

associates of the primary entity because of subparagraph (i) of this paragraph

and because of the preceding paragraphs of this subsection.

"(2) 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;

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 application of this paragraph of this subsection;

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

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).

"(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;

(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.

"(4) 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);

company were the primary entity, would be an associate of the company because

of subsection (2) or (3).

"(5) 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

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;

(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.

"(6) 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

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.

"(7) In this section, and in any other provision of this Act in so far as

that provision has effect for the purposes of this section:

(a) a reference to the spouse of a person (in this paragraph called the

`first person'):

(i) includes a reference to a de facto spouse of

the first person; and

(ii) does not include a reference to a person who

is legally married to the first person but is living separately and apart from

the first person on a permanent basis; and

(b) a reference to the de facto spouse of a person (in this paragraph

called the `first person') is a reference to a person who (although not

legally married to the first person) is living with the first person as the

husband or wife of the first person on a genuine domestic basis.

Statutory accounting period of a company

"319. (1) Subject to this section, each period of 12 months finishing at the

end of 30 June is a statutory accounting period of a company.

"(2) 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.

"(3) The new day must be:

(a) if:

(i) the company has not previously given a notice under this section; and

(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;

either of those days; or

(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).

"(4) Subject to any further application of subsection (2) and to subsection

(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.

"(5) 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

(ii) later statutory accounting periods are the successive periods of 12

months finishing at the end of the new day.

Listed countries and unlisted countries

"320. (1) In this Part:

`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;

`unlisted country' means:

(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.

"(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.

"(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.

"(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.

Each listed country and each unlisted country to be treated as a separate

foreign country

"321. 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. Meaning of `entitled to acquire'

"322. 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.

State foreign taxes may be treated as federal foreign taxes

"323. 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.

When income or profits subject to tax in a listed country

"324. (1) Subject to subsection (2), 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:

(a) 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; or

(b) both of the following conditions are satisfied:

(i) either of the following sub-subparagraphs applies:

(A) regulations made for the purposes of section 160AFF provide that an

amount of foreign tax (other than a withholding-type tax) not actually paid in

respect of the item because of a particular provision of a law of the listed

country is deemed to have been paid;

(B) a double tax agreement provides that an amount of foreign tax (other

than a withholding-type tax) not actually paid in respect of the item because

of a particular provision of a law of the listed country is deemed to have

been paid;

(ii) if that foreign tax had been payable, it would have been payable under

a tax law of the listed country in respect of the item because the item would

have been included in the tax base of that law for the tax accounting period.

"(2) If:

(a) apart from this subsection, 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.

When dividends etc. taxed in a listed country at normal company tax rate

"325. 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.

AFI subsidiary

"326. (1) 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%;

(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.

"(2) 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.

"(3) 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.

"(4) 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.

"(5) 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.

Eligible finance shares

"327. 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;

(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

(iii) any other relevant matters;

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.

Non-resident family trusts

"328. (1) 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 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.

"(2) For the purposes of this section, a trust is a post-marital 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

marriage; 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;

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.

"(3) 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;

(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

(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.

"(4) 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.

"(5) Subsections (1) and (4) do not prevent a trust from being a