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Acquiring an interest in a CFC during an income year

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Published on 01 Sep 20 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

The Australian controlled foreign company (CFC) rules are contained in Pt X of the Income Tax Assessment Act 1936 (Cth). Broadly, these rules seek to attribute to Australian taxpayers certain income derived by a non-resident company that is controlled by Australian residents and tax such income on an accruals basis, unless the non-resident company is subject to a tax system
that is deemed comparable to Australia’s or the non-resident company is predominantly engaged in active business. This article focuses on the implications of the CFC rules where an Australian taxpayer acquires an interest in a CFC during an income year. The author is of the view that it could give rise to certain undesired outcomes and recommends that such taxpayers consider the
potential impact of the transaction and possible ways to minimise such impact as part of its due diligence process.

Author profile

Wendy Hartanti
Wendy is a Director with PricewaterhouseCoopers. - Current at 14 March 2018
Click here to expand/collapse more articles by Wendy Hartanti.

 

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