Document ID: chunk:federal_register_of_legislation:C2025C00014:section:401:p1
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 401 (pt 1/3)
Character Range: 1997058–1999802

401  Reduction of disposal consideration or capital proceeds if attributed income not distributed
 (1) If:
 (a) it is necessary, for the purposes of applying a provision of this Act in calculating the attributable income of the eligible CFC in relation to the eligible taxpayer, to take into account:
 (i) the amount of consideration received, entitled to be received or taken to have been received, by the eligible CFC in respect of the disposal of an asset; or
 (ii) the capital proceeds from a CGT event happening in relation to a CGT asset;
  being an asset that is an interest in an attribution account entity (the disposal entity); and
 (b) immediately before the disposal or CGT event takes place, either or both of the following conditions are satisfied:
 (i) there is an attribution surplus for the disposal entity in relation to the eligible taxpayer;
 (ii) there is an attribution surplus for one or more other attribution account entities in relation to the eligible taxpayer, where each such entity is one in which the eligible taxpayer has an indirect attribution account interest held through the disposal entity;
then:
 (c) for the purpose of calculating the attributable income, the consideration or capital proceeds that, apart from this section, would be taken into account under the provision referred to in paragraph (a) in respect of the disposal or CGT event is, subject to subsection (3), taken to be reduced by the grossed‑up amount of the attribution surplus, or the sum of the grossed‑up amounts of the attribution surpluses, as the case requires; and
 (d) for the purposes of this Act, attribution debits and credits arise in accordance with subsection (5).
 (3) For the purposes of paragraph (1)(c):
 (a) a reference to the grossed‑up amount of an attribution surplus is a reference to the amount of the surplus divided by the eligible taxpayer's attribution account percentage for the eligible CFC; and
 (b) where the disposal of the asset, or the CGT event, causes the eligible taxpayer's attribution account percentage for an attribution account entity in relation to which there is an attribution surplus to be reduced by a proportion, then only that proportion of the attribution surplus is, subject to this subsection, to be taken into account under that paragraph; and
 (c) where there is only one attribution surplus referred to in that paragraph and (after any application of paragraph (b) of this subsection) its grossed‑up amount exceeds the consideration in respect of the disposal or the capital proceeds from the CGT event, then the surplus is only to be taken into account to the extent that its grossed‑up amount equals the consideration or those capital proceeds; and
 (d) where there are 2 or more