Commonwealth Consolidated Acts

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.