Document ID: chunk:federal_register_of_legislation:C2005C00443:clause:2_23ah:p1
Version: federal_register_of_legislation:C2005C00443
Segment Type: clause
Provision Reference: sch 2 cl 23AH (pt 1/4)
Character Range: 39097–41641

23AH  Foreign branch income of Australian companies not assessable

Objects

 (1) The objects of this section are:
 (a) to ensure that active foreign branch income derived by a resident company, and capital gains made by a resident company in disposing of non‑tainted assets used in deriving foreign branch income, are not assessable income or exempt income of the company; and
 (b) to include in the assessable income of a resident company that part of its income and capital gains derived through a branch in a foreign country that is comparable to the amounts that would be included in an attributable taxpayer's assessable income for income and capital gains derived by a CFC resident in the same foreign country; and
 (c) to get the same outcomes where one or more partnerships or trusts are interposed between a resident company and a foreign branch.

Foreign branch income not assessable

 (2) Subject to this section, foreign income derived by a company, at a time when the company is a resident in carrying on a business, at or through a PE of the company in a listed country or unlisted country is not assessable income, and is not exempt income, of the company.

Foreign capital gains and losses disregarded

 (3) Subject to this section, a capital gain from a CGT event happening to a CGT asset is disregarded for the purposes of Part 3‑1 of the Income Tax Assessment Act 1997 if:
 (a) the gain is made by a company that is a resident; and
 (b) the company used the asset wholly or mainly for the purpose of producing foreign income in carrying on a business at or through a PE of the company in a listed country or unlisted country; and
 (c) the asset does not have the necessary connection with Australia.

 (4) Subject to this section, a capital loss from a CGT event happening to a CGT asset is disregarded for the purposes of Part 3‑1 of the Income Tax Assessment Act 1997 if:
 (a) the loss is made by a company that is a resident; and
 (b) the company used the asset wholly or mainly for the purpose of producing foreign income in carrying on a business at or through a PE of the company in a listed country or unlisted country; and
 (c) had the loss been a gain, it would be disregarded under subsection (3).

Exceptions: listed country PE

 (5) Subsection (2) does not apply to foreign income derived by the company if:
 (a) the PE is in a listed country; and
 (b) the PE does not pass the active income test (see subsection (12)); and
 (c) the foreign income is both:
 (i) adjusted tainted income (see subsection (13));