INCOME TAX ASSESSMENT ACT 1936 - SECT 457 Assessability where CFC changes residence from unlisted country to listed country or to Australia

INCOME TAX ASSESSMENT ACT 1936 - SECT 457

  (1)   Where at any time (in this section called the residence - change time ) a company that:

  (a)   is a CFC; and

  (b)   has an attributable taxpayer;

ceases to be resident in an unlisted country and becomes:

  (c)   a resident of a listed country; or

  (d)   a Part   X Australian resident;

then the attributable taxpayer's assessable income of the year of income in which the residence - change time occurs includes the amount calculated under subsection   (2).

  (2)   The amount is calculated using the formula:

where:

"Attribution percent" means the attributable taxpayer's attribution percentage, at the residence - change time, in relation to the CFC.

"Adjusted distributable profits" means:

  (a)   if paragraph   (1)(c) applies--the amount that would be the CFC's distributable profits at the residence - change time if:

  (i)   the CFC's income were its adjusted tainted income (excluding any non - portfolio dividends) derived during the period beginning on the first day of the statutory accounting period in which the residence - change time occurred and ending immediately before the time at which the residence - change time occurs; and

  (ii)   the CFC's only other income were an amount that the CFC would have derived had it disposed of all of its tainted assets immediately before the residence - change time for a consideration equal to their market value; and

  (iii)   the CFC's only expenses were expenses related to income covered by subparagraphs   (i) and (ii); or

  (b)   if paragraph   (1)(d) applies--the amount that would be the CFC's distributable profits at the residence - change time if:

  (i)   the CFC's only income were its adjusted tainted income (excluding any non - portfolio dividends) derived during the period beginning on the first day of the statutory accounting period in which the residence - change time occurred and ending immediately before the time at which the residence - change time occurs; and

  (ii)   the CFC's only expenses were expenses related to income covered by subparagraph   (i).

  (3)   If:

  (a)   at the residence - change time, regulations made for the purposes of section   320 come into effect; and

  (b)   a result of those regulations coming into effect is that the company:

  (i)   ceases to be a resident of an unlisted country; and

  (ii)   becomes a resident of a listed country;

    at the residence - change time;

then no amount is to be included in the attributable taxpayer's assessable income under subsection   (1) in relation to that change of residence.