Document ID: chunk:federal_register_of_legislation:C2025C00014:section:23ah:p1
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 23AH (pt 1/5)
Character Range: 130384–132936

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, (except income and capital gains from the operation of ships or aircraft in international traffic) 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; and
 (d) to limit the effect mentioned in paragraph (a) where there is a branch hybrid mismatch for the purposes of Division 832 of the Income Tax Assessment Act 1997.

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 is not taxable Australian property.
 (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).

Exception relating to hybrid mismatch rules
 (4A) Subsection (2) does not apply