Contents

Part VI--Collection and recovery of tax                                                                    1

Division 1--General                                                                                                       1

204........ When tax payable ............................................................................... 1

213........ Temporary business ........................................................................... 2

219........ Consolidated assessments .................................................................. 3

Division 8--Prompt recovery, through estimates and payment agreements, of certain amounts not remitted                                                                                                      4

Subdivision A--Object and interpretation                                                               4

222AFA Object and outline ............................................................................... 4

222AFB Interpretation ...................................................................................... 4

222AFC Unpaid amount ................................................................................... 6

Subdivision B--Making, reducing and revoking estimates                                 6

222AGAWhen Commissioner may make estimate ........................................... 6

222AGBNotice to person liable ........................................................................ 7

222AGCReducing amount of estimate .............................................................. 8

222AGDRevoking estimate ............................................................................... 8

222AGE Matters for Commissioner to consider under sections 222AGC and 222AGD       9

5>222A GF Requirements for statutory declaration under section 222AGC or 222AGD          10

222AGGFurther estimate after previous estimate revoked or
discharged ......................................................................................... 11

Subdivision C--Recovering unpaid amount of estimate                                      12

222AHANature of liability created by notice ................................................. 12

222AHBRefund if estimate exceeds underlying liability ................................. 12

222AHCDefences in recovery proceedings ..................................................... 13

222AHDEffect of affidavit on estimate .......................................................... 14

222AHE Requirements for affidavit under section 222AHC .......................... 14

Subdivision D--Insolvency proceedings                                                                16

222AIA. Effect on statutory demand if estimate reduced or revoked ............. 16

222AIB. Defences on winding up application ................................................ 16

222AIC. Effect of affidavit on estimate .......................................................... 17

222AID. Requirements for affidavit under section 222AIB ............................ 18

222AIE. Defences under section 222AIB not available on application to set aside statutory demand 19

222AIF. Estimate provable in bankruptcy or winding up .............................. 19

222AIG. Rejection of proof of debt relating to estimate ................................. 19

222AIH. Requirements for statutory declaration under section 222AIG ....... 21

222AII.. Provisions altering effect of Corporations Act ................................. 22

Subdivision E--Late payment of estimate                                                              22

222AJA Liability to the general interest charge .............................................. 22

222AJB. Effect of paying the general interest charge ...................................... 23

Subdivision F--Effect on liabilities under this and other Divisions if estimate reduced or revoked                24

222AKALiabilities adjusted with effect from when they arose ...................... 24

222AKB Reduction or revocation does not prejudice Commissioner's rights in relation to underlying liability    24

Subdivision G--Payment agreements                                                                    24

222ALA Commissioner may make agreement ................................................. 24

222ALB Effect of certain payments ............................................................... 25

Subdivision H--Miscellaneous                                                                                26

222AMAEffect of judgment on liability on which it is based ........................ 26

222AMBNotices under this Division where trustee has control of
affairs of person liable ...................................................................... 26

Division 9--Penalties for directors of non‑remitting companies         28

Subdivision A--Object and interpretation                                                             28

222ANAObject and outline ............................................................................. 28

222ANBInterpretation .................................................................................... 28

Subdivision B--Company failing to remit deductions, amounts withheld etc. 29

222AOAApplication ....................................................................................... 29

222AOBDirectors to cause company to remit or to go into voluntary
administration or liquidation--deductions and amounts withheld ... 30

222AOBAADirectors to cause company to remit or to go into
voluntary administration or liquidation--alienated personal services payments     31

222AOBADirectors to cause company to remit or to go into voluntary
administration or liquidation--non‑cash benefits ............................. 32

222AOCPenalty for directors in office on or before due date ......................... 33

222AODPenalty for new directors ................................................................. 33

222AOE Commissioner must give 14 days' notice before recovering penalty 34

222AOF How notice may be given ................................................................. 35

222AOGRemission of penalty if section 222AOB, 222AOBAA or
222AOBA complied with before notice period ends ....................... 35

222AOHEffect of director paying penalty or company discharging
underlying liability ............................................................................ 36

222AOI. Director's rights of indemnity and contribution ............................... 36

222AOJ Defences ........................................................................................... 37

Subdivision C--Company failing to pay estimate under Division 8                  37

222APA Application ....................................................................................... 37

222APB Directors to cause company to pay estimate or to go into voluntary administration or liquidation        37

222APC Penalty for directors in office within 14 days after notice of estimate 38

222APD Penalty for new directors ................................................................. 38

222APE Commissioner must give 14 days' notice before recovering penalty 39

222APF Remission of penalty if section 222APB complied with before notice period ends                40

222APG Effect of director paying penalty or company discharging liability in respect of estimate      40

222APH Director's rights of indemnity and contribution ............................... 40

222API. Defences ........................................................................................... 41

Subdivision D--Company contravening payment agreement under Division 8 42

222AQADirectors to ensure that company complies with payment
agreement .......................................................................................... 42

222AQBEffect of director paying penalty or company discharging
liability .............................................................................................. 42

222AQCDirector's rights of indemnity and contribution ............................... 43

222AQDDefences ........................................................................................... 43

Division 10--Miscellaneous                                                                                    45

222ARAThis Part not to limit or exclude Chapter 5 of the Corporations
Act .................................................................................................... 45

Part VIIA--Registration of tax agents                                                                      46

Division 1--Interpretation                                                                                        46

251A..... Interpretation .................................................................................... 46

251B..... Territories ......................................................................................... 47

251BA.. Companies in which qualified directors have a substantial interest . 47

251BB... Non‑exempt companies .................................................................... 48

251BC... Fit and proper persons to prepare income tax returns ..................... 49

Division 2--Tax Agents' Boards                                                                          51

251C..... Tax Agents' Boards .......................................................................... 51

251D..... Constitution of Boards ..................................................................... 51

251DA.. Remuneration and allowances ........................................................... 51

251E...... Conduct of business of Board .......................................................... 51

251F...... Board not to be sued ......................................................................... 52

251G..... Summoning of witnesses etc. ............................................................ 52

Division 3--Registration of tax agents                                                              53

Subdivision A--Original registration of tax agents                                            53

251J...... Applications for original registration of tax agents ........................... 53

251JA... Original registration of tax agents ..................................................... 53

Subdivision B--Re‑registration of tax agents                                                      54

251JB.... Applications for re‑registration of tax agents ................................... 54

251JC.... Re‑registration of tax agents ............................................................. 55

Subdivision C--Effect of changes in constitution of partnerships                    57

251JD... Registration of a partnership terminated if constitution changes ..... 57

Subdivision D--Changes in constitution of partnerships-registration of successor tax agents     57

251JE.... Applications for registration of successor tax agents ....................... 57

251JF.... Registration of successor .................................................................. 59

Subdivision E--Duration of registration of tax agents                                        59

251JG... Registration of tax agents to be in force for 3 years ......................... 59

Subdivision F--Surrender of registration of tax agents                                     60

251JH... Surrender of registration ................................................................... 60

Subdivision G--Termination of registration of tax agents other than partnerships           60

251JK... Death of natural person .................................................................... 60

251JM.. Companies ceasing to exist ............................................................... 60

Subdivision H--Cancellation or suspension of registration of tax agents      61

251K..... Cancellation or suspension of registration of tax agents ................... 61

Division 4--Registration of nominees of tax agents                                   64

251KA.. Original nominee to be registered as a nominee ................................ 64

251KB.. Applications for registration or re‑registration of nominees ............ 64

251KC.. Registration and re‑registration of nominees of tax agents ............... 65

251KD.. Duration of registration of nominees ................................................ 66

251KE... Cancellation of registration of nominees ........................................... 67

Division 5--Refund of lodgment fees                                                                 68

251KF... Refund of lodgment fees if application withdrawn .......................... 68

Division 6--Notification obligations of tax agents etc.                              69

251KG.. Tax agents who are natural persons .................................................. 69

251KH.. Tax agents that are partnerships ....................................................... 69

251KJ... Changes in the constitution of partnerships ..................................... 69

251KK.. Tax agents that are companies .......................................................... 70

Division 7--Privileges and duties of registered tax agents                    71

251L...... Unregistered tax agents not to charge fees ........................................ 71

251LA... Recognised professional associations ............................................... 73

251M.... Negligence of registered tax agent etc. ............................................... 74

251N..... Preparation of returns etc. on behalf of registered tax agents ........... 75

251O..... Advertising etc. by persons other than registered tax agents ........... 76

Division 8--Miscellaneous                                                                                       77

251P...... Offences by partnerships ................................................................. 77

251Q..... Removal of business to another State ............................................... 77

251QA.. Review of decisions .......................................................................... 77

251QB.. Statements to accompany notification of decisions ........................ 78

Part VIIB--Medicare levy and Medicare levy surcharge                             79

251R..... Interpretation .................................................................................... 79

251S...... Medicare levy ................................................................................... 83

251T..... Levy (other than certain levy increases) not payable by prescribed persons or by certain trustees       85

251U..... Prescribed persons ............................................................................ 85

251V..... Subsections 251R(4), (5), (6B), (6C) and (6D) not to apply to certain medicare levy increases             88

251VA.. Subsection 251U(3) not to apply for certain medicare levy increases 88

251W.... Regulations ....................................................................................... 89

251X..... Notice of assessment to set out Medicare levy and surcharge ......... 89

251Z..... Administration of Medicare levy surcharge Act .............................. 89

Part VIII--Miscellaneous                                                                                                 90

252........ Public officer of company ................................................................ 90

252A..... Public officer of trust estate ............................................................. 92

254........ Agents and trustees .......................................................................... 96

255........ Person in receipt or control of money from non‑resident ................ 97

257........ Payment of tax by banker ................................................................. 99

260........ Contracts to evade tax void .............................................................. 99

262........ Periodical payments in the nature of income .................................. 100

262A..... Keeping of records .......................................................................... 100

263........ Access to books etc. ....................................................................... 108

264........ Commissioner may require information and evidence .................... 109

264AA.. Reporting to Agriculture Secretary ................................................. 109

264A..... Offshore information notices .......................................................... 110

264BB... Commissioner may require private health insurers to provide information             115

265A..... Release of liability of members of the Defence Force on death ...... 116

265B..... Notices in relation to certain securities ........................................... 118

266........ Regulations ..................................................................................... 119

Part X--Attribution of income in respect of controlled foreign companies                 120

Division 1--Preliminary                                                                                           120

316........ Object of Part ................................................................................. 120

317........ Interpretation .................................................................................. 120

318........ Associates ....................................................................................... 138

319........ Statutory accounting period of a company .................................... 142

320........ Listed countries and unlisted countries .......................................... 144

321........ Each listed country and each unlisted country to be treated as a separate foreign country     145

322........ Meaning of entitled to acquire ........................................................ 145

323........ State foreign taxes may be treated as federal foreign taxes ............. 145

324........ When income or profits subject to tax in a listed country .............. 145

325........ When dividends etc. taxed in a country at normal company tax rate 147

326........ AFI subsidiary ................................................................................ 148

327........ Eligible finance shares ..................................................................... 149

327A..... Widely distributed finance shares ................................................... 150

327B..... Transitional finance shares ............................................................. 153

328........ Non‑resident family trusts ............................................................. 157

329........ Public unit trusts ............................................................................ 160

330........ Tax detriment .................................................................................. 160

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 ................................................................................ 160

332........ Companies that are residents of listed countries ............................ 161

332A..... Companies that are residents of section 404 countries .................. 161

333........ Companies that are residents of unlisted countries ........................ 161

334A..... Voting interests in companies ......................................................... 163

335........ References extend to pre‑commencement matters and things ........ 164

Division 2--Types of entity                                                                                    165

Subdivision A--Australian entities                                                                      165

336........ Australian entity ............................................................................. 165

337........ Australian partnership .................................................................... 165

338........ Australian trust ............................................................................... 165

Subdivision B--Controlled foreign entities (CFEs)                                           165

339........ Controlled foreign entity (CFE) ..................................................... 165

340........ Controlled foreign company (CFC) ................................................ 166

341........ Controlled foreign partnership (CFP) ............................................ 166

342........ Controlled foreign trust (CFT) ....................................................... 166

Subdivision C--Eligible transferors in relation to trusts                                167

343........ Interpretation .................................................................................. 167

344........ References to transfer of property or services ............................... 168

345........ Deemed transfers of property or services ...................................... 169

346........ Circumstances in which a transfer of property or services is an eligible business transaction                 172

347........ Eligible transferor in relation to a discretionary trust ..................... 173

348........ Eligible transferor in relation to a non‑discretionary trust or a public unit trust     174

Division 3--Control interests, attribution interests, attributable taxpayers and attribution percentages                                                                                                                     176

Subdivision A--Control interests                                                                         176

349........ Associate‑inclusive control interest in a company or trust ............ 176

350........ Direct control interest in a company .............................................. 178

351........ Direct control interest in a trust ..................................................... 180

352........ Indirect control interest in a company or trust ............................... 181

353........ Control tracing interest in a company ............................................ 182

354........ Control tracing interest in a CFP .................................................... 183

355........ Control tracing interest in a CFT .................................................... 183

Subdivision B--Attribution interests                                                                   184

356........ Direct attribution interest in a CFC or CFT ................................... 184

357........ Indirect attribution interest in a CFC or CFT ................................ 188

358........ Attribution tracing interest in a CFC .............................................. 189

359........ Attribution tracing interest in a CFP .............................................. 189

360........ Attribution tracing interest in a CFT .............................................. 189

Subdivision C--Attributable taxpayers and attribution percentages             190

361........ Attributable taxpayer in relation to a CFC or a CFT ..................... 190

362........ Attribution percentage of an attributable taxpayer ........................ 191

Division 4--Attribution accounts                                                                        194

363........ Attribution account entity .............................................................. 194

364........ Attribution account percentage ...................................................... 194

365........ Attribution account payment ......................................................... 194

366........ Direct attribution account interest in a company ........................... 196

367........ Direct attribution account interest in a partnership ....................... 197

368........ Direct attribution account interest in a trust .................................. 198

369........ Indirect attribution account interest in an entity ............................ 199

370........ Attribution surplus ......................................................................... 200

371........ Attribution credit ............................................................................ 201

372........ Attribution debit ............................................................................. 206

373........ Grossed‑up amount of an attribution debit .................................... 207

Division 7--Calculation of attributable income of CFC                          208

Subdivision A--Basic principles                                                                           208

381........ Separate attributable income for each attributable taxpayer ........... 208

382........ Attributable income is taxable income calculated on certain assumptions                208

383........ Basic assumptions .......................................................................... 208

384........ Additional assumption for unlisted country CFC .......................... 209

385........ Additional assumption for listed country CFC .............................. 210

386........ Adjusted tainted income ................................................................. 213

387........ Reduction of attributable income because of interim dividends ..... 214

Subdivision B--General modifications of Australian tax law                          214

388........ Double tax agreements to be disregarded ........................................ 214

389........ Certain provisions to be disregarded in calculating attributable income   214

389A..... Other provisions to be disregarded in calculating attributable income 215

390........ Elections to be made by eligible taxpayer ....................................... 215

392........ Notional assessable amounts are to be pre‑tax ............................... 216

393........ Notional allowable deduction for taxes paid ................................... 216

394........ Notional allowable deduction for eligible finance share dividends, widely distributed finance share dividends and transitional finance share dividends ................................................ 216

395........ Expenditure incurred to produce income or profits in later statutory accounting periods       217

396........ Modified application of sections 25A and 52 ................................ 217

397........ Modified application of trading stock provisions .......................... 217

398........ Modified application of depreciation provisions ........................... 218

398A..... Application of Division 3A of Part III ........................................... 218

399........ Modifications of net income of partnerships and trusts ................ 219

399A..... Modified application of bad debt etc. provisions .......................... 220

400........ Modified application of Division 13 of Part III ............................. 222

401........ Reduction of capital proceeds where attributed income not distributed 222

402........ Additional notional exempt income--unlisted or listed country CFC 225

403........ Additional notional exempt income--unlisted country CFC ......... 227

404........ Additional notional exempt income--listed or section 404 country CFC                228

Subdivision C--Modifications relating to Australian capital gains tax         228

405........ Interpretation .................................................................................. 228

406........ Meaning of c ommencing day and commencing day asset ............... 228

408........ Certain capital gains and losses disregarded ................................... 229

408A..... Certain events before commencing day ignored .............................. 229

409........ Losses before 30 June 1990 to be disregarded ................................ 229

410........ General modifications--CGT ......................................................... 229

411........ Commencing day assets taken to have been acquired on commencing day              230

412........ Cost base of commencing day asset ............................................... 230

413........ Adjustment of cost base as at commencing day--return of capital 230

414........ Exercise of rights ............................................................................. 231

418........ Options ........................................................................................... 232

418A..... Effect of change of residence from Australia to listed or unlisted country               232

419........ Modified application of Subdivision 126‑B of the Income Tax Assessment Act 1997             233

421........ Elections under CGT roll‑over provisions ..................................... 234

422........ Adjustment of capital proceeds where change of residence by eligible CFC from unlisted to listed country          236

423........ Adjustment of capital proceeds where section 47A applies to rolled‑over assets   238

Subdivision D--Modifications relating to losses                                               239

425........ Sometimes‑exempt income etc. ....................................................... 239

426........ Creation of loss ............................................................................... 240

427........ Certain provisions to be disregarded .............................................. 240

428........ Subdivision to apply as if there were always a requirement to calculate attributable income 240

429........ Notional allowable deduction for (sometimes‑exempt income) loss 241

431........ Deduction etc. for previous period loss ......................................... 241

Subdivision E--Modifications relating to application of Part XI                     243

431A..... Exemption of attributable taxpayer from Part XI .......................... 243

Division 8--Active income test                                                                           245

Subdivision A--Basic conditions for passing the active income test             245

432........ Active income test .......................................................................... 245

Subdivision B--Tainted income ratio                                                                   246

433........ Tainted income ratio ....................................................................... 246

434........ Gross turnover ................................................................................ 246

435........ Gross tainted turnover .................................................................... 249

436........ Amounts excluded from active income test .................................... 249

Subdivision C--Treatment of partnership income                                             251

437........ Treatment of partnership income ................................................... 251

Subdivision D--General interpretive provisions                                                253

438........ Roll‑overs--asset disposals ........................................................... 253

439........ When currency exchange gains or losses relate to active income transactions         256

440........ Asset disposals--revaluations and arm's length amounts ............. 257

441........ Hire‑purchase and other property financing transactions .............. 258

442........ Assumption of rights of lender under a loan .................................. 258

443........ Net tainted commodity gains .......................................................... 258

444........ Net tainted currency exchange gains ............................................... 258

445........ Net gains--disposal of tainted assets ............................................. 259

Subdivision E--Passive income, tainted sales income and tainted services income            260

446........ Passive income ................................................................................ 260

447........ Tainted sales income ....................................................................... 263

448........ Tainted services income .................................................................. 268

Subdivision F--Special rules relating to AFI subsidiaries carrying on financial intermediary business     272

449........ AFI subsidiaries--interest income ................................................. 272

450........ AFI subsidiaries--asset disposals and currency transactions ........ 273

Subdivision G--Substantiation requirements                                                    276

451........ Active income test--substantiation requirements for company .... 276

452........ Active income test--substantiation requirements for partnership 278

453........ Active income test--substantiation requirements for attributable taxpayer            281

454........ Assessment on assumption--retention of accounts etc. and compliance with information notices        283

455........ Amendment of assessments ........................................................... 283

Division 9--Attribution of attributable income and other amounts 285

456........ Assessability in respect of CFC's attributable income .................. 285

456A..... Reduction of section 456 assessability where item subject to foreign accruals tax 285

457........ Assessability where CFC changes residence from unlisted country to listed country or to Australia    287

459A..... Assessability where CFC or CFT has interest in certain attributable taxpayers     288

460........ Only resident partners, beneficiaries etc. liable to be assessed as a result of attribution         290

460A..... Effect of reducing section CGT event J1 amount ........................... 292

Division 10--Post‑attribution asset disposals                                              294

461........ Reduction of capital proceeds where attributed income not distributed 294

Division 11--Keeping of records                                                                        297

462........ Keeping of records--section 456 ................................................... 297

462A..... Keeping of records--section 457 ................................................... 297

464A..... Keeping of records--section 459A ................................................ 298

465........ Offence of failing to keep records ................................................... 299

466........ Manner in which records required to be kept ................................. 299

467........ Circumstances where records not required to be kept--reasonable excuse etc.       299

468........ Treatment of partnerships .............................................................. 299

Part XI--Foreign investment funds and foreign life assurance policies 301

Division 1--Preliminary                                                                                           301

Subdivision A--Application of Part                                                                      301

469........ Taxpayers to be taxed on share of income of certain foreign investment funds and foreign life assurance policies ........................................................................................................ 301

Subdivision B--Meaning of certain expressions used in this Part                302

470........ Definitions ...................................................................................... 302

471........ Australian entity ............................................................................. 306

472........ Australian partnership .................................................................... 306

473........ Australian trust ............................................................................... 306

474........ Distributions by a FIF or a FLP .................................................... 307

475........ Entitlement to acquire ..................................................................... 307

476........ Quoted price ................................................................................... 307

477........ Resident superannuation entity ...................................................... 308

478........ Tax detriment .................................................................................. 308

479........ Wholly‑owned subsidiary .............................................................. 309

Subdivision C--Key concepts                                                                                 310

480........ Outline of Subdivision .................................................................... 310

481........ What is a FIF .................................................................................. 310

482........ What is a FLP ................................................................................. 310

483........ What is an interest in a FIF or a FLP ............................................. 312

484........ Bare trustee's interest to be attributed to beneficiary .................... 312

485........ Taxpayers to whose interests in FIFs and FLPs this Part applies 313

485AA.. Election to exclude interests in foreign hybrids from operation of this Part            314

485A..... Applying operative provision in working out net income of partnership or trust estate        316

486........ Notional accounting period of a FIF ............................................... 316

487........ Notional accounting period of a FLP .............................................. 317

Subdivision D--The disposal and acquisition of interests                                319

488........ What is a disposal or acquisition of an interest in a FIF or a FLP . 319

489........ Time of disposal or acquisition of interest ..................................... 320

490........ Consideration for disposal or acquisition ....................................... 320

Subdivision E--Associates                                                                                     321

491........ Associates of an entity to be determined in accordance with section 318 as modified            321

Division 2--Exemption of attributable taxpayers for interests in certain FIFs 323

492........ Object of Division .......................................................................... 323

493........ Exemption of attributable taxpayer in relation to certain trusts ..... 323

494........ Exemption of attributable taxpayer referred to in section 456 ....... 323

Division 3--Exemption for interest in foreign company that is designated as engaging, or whose assets are principally for use, in certain activities                          325

495........ Object of Division .......................................................................... 325

496........ Interpretation .................................................................................. 325

497........ Exemption ....................................................................................... 325

498........ How to determine whether a foreign company is taken to have been principally engaged in eligible activities       326

499........ Stock exchange listing method ........................................................ 327

500........ Balance‑sheet method ..................................................................... 328

501........ Indirect ownership of paid‑up share capital of company ............. 332

Division 4--Exemption for interest in foreign bank or holding company of foreign bank            334

502........ Object of Division .......................................................................... 334

503........ Exemption for interest in foreign bank ........................................... 334

504........ Exemption for interest in foreign holding company of foreign bank 335

Division 5--Exemption for interest in foreign company whose assets are principally for use in carrying on life insurance business                                                             337

505........ Object of Division .......................................................................... 337

506........ Exemption for interest in foreign life insurance company .............. 337

507........ How to determine whether a foreign company was principally engaged in carrying on life insurance business      337

507A..... Exemption for interest in foreign holding company of foreign life insurance company           341

Division 6--Exemption for interest in foreign general insurance company         345

508........ Object of Division .......................................................................... 345

509........ Exemption for interest in foreign general insurance company ........ 345

509A..... Exemption for interest in foreign holding company of foreign general insurance company     346

Division 7--Exemption for interest in foreign company engaged in certain activities connected with real property                                                                                                  348

510........ Object of Division .......................................................................... 348

511........ Exemption ....................................................................................... 348

511A..... Exemption for interest in foreign holding company of foreign real property company           349

Division 8--Exemption for interests in certain US entities                  351

512........ Object of Division .......................................................................... 351

512A..... Division does not apply to interests in CFTs ................................ 351

513........ Exemptions ..................................................................................... 351

Division 9--Exemption for interests of less than $50,000                    354

514........ Object of Division .......................................................................... 354

515........ Exemption ....................................................................................... 354

Division 11--Exemption for interest in an employer‑sponsored superannuation fund 355

518........ Object of Division .......................................................................... 355

519........ Interests of employees and former employees to be exempt ......... 355

Division 11A--Exemption for complying superannuation/FHSA assets, segregated exempt assets and interests held by complying superannuation entities etc. 356

519A..... Objects of Division ......................................................................... 356

519B..... Exemption ....................................................................................... 356

Division 12--Exemption for certain interests that are trading stock 359

520........ Object of Division .......................................................................... 359

521........ Exemption ....................................................................................... 359

Division 13--Exemption for interest in foreign company principally engaged in several activities       360

522........ Object of Division .......................................................................... 360

523........ Exemption ....................................................................................... 360

523A..... Exemption for interest in foreign holding company of foreign mixed activity company          361

Division 14--Exemption for interests in FIFs the value of which is not more than 10% of the value of all taxpayers' interests in FIFs                                                         363

524........ Object of Division .......................................................................... 363

525........ Exemption ....................................................................................... 363

Division 15--Exemption for certain interests of underwriting members of Lloyd's       365

526........ Object of Division .......................................................................... 365

527........ Exemption ....................................................................................... 365

Division 16--Assessable income to include foreign investment fund income    366

528........ Object of Division .......................................................................... 366

529........ Foreign investment fund income to be included in assessable income 366

530........ Reduction of foreign investment fund income because of interim dividend or interim distribution of trust income ........................................................................................................ 367

530A..... Reduction of foreign investment fund income because of employee share scheme 368

Division 17--Foreign Investment Fund losses resulting from application of market value method or cash surrender value method to be allowable deductions      369

531........ Object of Division .......................................................................... 369

532........ Foreign investment fund loss from FIF under market value method to be allowable deduction              369

533........ Foreign investment fund loss from FLP under cash surrender value method to be allowable deduction                 369

533A..... Foreign investment fund losses to be expressed in Australian currency 370

Division 17A--Deduction for overseas superannuation transfers    371

533B..... Deduction for overseas superannuation transfers .......................... 371

Division 18--How to determine whether Foreign Investment Fund income accrued to a taxpayer from a FIF or a FLP                                                                                         372

Subdivision A--Preliminary                                                                                  372

534........ Object of Division .......................................................................... 372

535........ Methods applicable in relation to a FIF ........................................ 372

536........ Methods applicable in relation to FLP ........................................... 373

Subdivision B--Market value method for FIFs                                                   375

537........ Procedure for determining foreign investment fund income by market value method              375

538........ Step 1--calculation of foreign investment fund amount ................ 375

539........ How market value is ascertained .................................................... 377

540........ Gross foreign investment fund income ........................................... 379

541........ Foreign investment fund loss .......................................................... 379

542........ Step 2--Calculation of foreign investment fund income ................ 379

Subdivision C--Deemed rate of return method for FIFs                                   382

543........ Procedure for determining foreign investment fund income from a FIF by deemed rate of return method              382

544........ Step 1--groups of interests ............................................................ 382

545........ Step 2--determination of opening value of interests ..................... 383

550........ If relevant period starts after 1 January 1993 ................................ 383

551........ Value of interests at start of relevant period (being later than 1 January 1993)--deemed rate of return method applied for previous period ......................................................................... 383

552........ Value of interests at start of relevant period (being later than 1 January 1993)--calculation method applied, or interests exempt, for previous period ............................................. 384

553........ Value of interests at start of relevant period (being later than 1 January 1993)--market value method applied for previous period ............................................................................... 385

554........ Value of interests at time of acquisition (after start of relevant period)   385

555........ Step 3--determination of foreign investment fund amount ........... 385

556........ Step 4--conversion of foreign investment fund amount to Australian currency     386

557........ Foreign investment fund income ..................................................... 386

Subdivision D--Calculation method for FIFs                                                      387

557A..... Certain other provisions to be disregarded in applying this Subdivision                 387

558........ Procedure for determining foreign investment fund income by calculation method                 387

559........ Determination of calculated profit or calculated loss of FIF .......... 387

559A..... Choice to work out notional income and notional deductions under Part X            388

560........ Notional income--general provision .............................................. 391

561........ Section 560 to be subject to following provisions .......................... 392

562........ Notional income--discounted securities ........................................ 392

563........ Notional income--interest in net income from partnership ........... 392

564........ Notional income--exclusion of certain dividends and trust distributions                393

565........ Derivation of income, profits or gains ............................................ 393

566........ Notional income to be pre‑tax ........................................................ 394

567........ Notional deductions--general provision ........................................ 394

567A..... Notional deductions: net capital losses .......................................... 394

568........ Notional deductions--expenditure in acquiring trading stock ........ 395

569........ Notional deductions--exclusion of expenditure in acquiring securities or partnership interest               395

570........ Notional deductions--amortisation of expenditure in acquiring property               395

571........ Notional deductions--interest in partnership loss ......................... 396

572........ Notional deductions--past calculated losses ................................. 397

573........ Notional deductions--taxes ............................................................ 397

574........ Notional deductions--certain amounts to be excluded ................... 397

575........ Application ..................................................................................... 398

576........ Notional income of FIF to include foreign investment fund income from second tier FIF or from FLP 398

577........ How to determine whether foreign investment fund income accrued from second tier FIF or from FLP                399

578........ What happens if there is a calculated loss in respect of second tier FIF 400

579........ If second tier FIF has interest in a third tier FIF or in a FLP ......... 400

580........ Procedure to be followed ................................................................ 401

581........ How to work out attribution percentage applicable to taxpayer in respect of interest or interests in foreign company ........................................................................................................ 402

582........ Procedure to be followed ................................................................ 404

583........ Foreign investment fund income ..................................................... 407

Subdivision E--Deemed rate of return method for FLPs                                  408

584........ Procedure for determining foreign investment fund income from FLP by deemed rate of return method                408

585........ Step 1--interests in a FLP ............................................................. 408

586........ Step 2--determination of opening value ........................................ 408

589........ If relevant period starts after 1 January 1993 ................................ 409

590........ Value at start of relevant period (being later than 1 January 1993) 409

591........ Value at time of acquisition (after start of relevant period) ............ 409

592........ Step 3--determination of foreign investment fund amount ........... 410

593........ Step 4--conversion of foreign investment fund amount to Australian currency     410

594........ Foreign investment fund income .................................................... 410

Subdivision F--Cash surrender value method for FLPs                                   411

595........ Procedure for determining foreign investment fund income by cash surrender value method 411

596........ Step 1--calculation of foreign investment fund amount ................ 411

598........ Gross foreign investment fund income ........................................... 412

599........ Foreign investment fund loss .......................................................... 412

600........ Step 2--Calculation of foreign investment fund income ................ 412

Division 19--FIF attribution accounts                                                             415

601........ FIF attribution account entity ........................................................ 415

602........ FIF attribution account percentage ................................................. 415

603........ FIF attribution account payments .................................................. 415

604........ FIF attribution surplus ................................................................... 416

605........ FIF attribution credit ...................................................................... 416

606........ FIF attribution debit ...................................................................... 421

607........ Additional FIF attribution debit ..................................................... 422

607AA.. Additional FIF attribution debit--deduction for overseas superannuation transfers               422

607A..... Grossed‑up amount of a FIF attribution debit ............................... 422

Division 21--Post‑attribution asset disposals                                              424

613........ Reduction of capital proceeds if FIF attributed income not distributed   424

Division 22--Keeping of records                                                                        425

614........ Application of Division .................................................................. 425

615........ Records of acts, transactions etc. ................................................... 425

616........ Interest in FIF--if market value method was applied .................... 425

617........ Interest in FIF--if deemed rate of return method was applied ...... 426

618........ Interest in FIF--if calculation method was applied ....................... 426

619........ Interest in FLP ................................................................................ 427

620........ Interest in FIF or FLP--if exemption applied ............................... 427

621........ Offence of failing to keep records ................................................... 428

622........ Manner in which records required to be kept ................................. 428

623........ If calculation method was applied--defence for failing to keep records if information unobtainable      428

624........ Treatment of partnerships .............................................................. 428

 

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