Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p22
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 22/38)
Character Range: 7433575–7436074

the test entity (or a part of the income or profits); and
 (b) that liable entity is also a liable entity in the non‑including country in respect of income or profits of the recipient of the payment.

832‑325  Meaning of liable entity

Entity is a taxpayer in respect of its own income or profits
 (1) An entity is a liable entity, in a country, in respect of its income or profits if:
 (a) for Australia:
 (i) *tax is imposed on the entity in respect of all or part of its income or profits for an income year; or
 (ii) the entity is a *public trading trust (including a trust that makes a choice under section 703‑50 (Choice to consolidate a consolidatable group)); or
 (iii) the entity is an entity to which Division 295 (about superannuation entities) applies; and
 (b) for a foreign country—*foreign income tax (except a tax covered by subsection 832‑130(7)) is imposed under the law of the foreign country:
 (i) on the entity in respect of all or part of its income or profits for a *foreign tax period; or
 (ii) on the income or profits of the entity in a way that corresponds to the way that foreign income tax is imposed under the law of that country on the income or profits of a company (regardless whether the foreign income tax is actually imposed on that entity, or another entity).
Note 1: The entity, and its income or profits, are generally identified disregarding tax provisions: see section 832‑30.
Note 2: An example is an entity that is a company (and is not a subsidiary member of a consolidated group or MEC group). In Australia, a company is the liable entity in respect of its income or profits.

Entity is a taxpayer in respect of another entity's income or profits
 (2) An entity is a liable entity, in a country, in respect of the income or profits of another entity (the test entity) if:
 (a) for Australia—*tax is imposed on the entity in respect of all or part of the income or profits of the test entity for an income year; and
 (b) for a foreign country—*foreign income tax (except a tax covered by subsection 832‑130(7)) is imposed under the law of the foreign country on the entity in respect of all or part of the income or profits of the test entity for a *foreign tax period.
Note 1: The test entity, and its income or profits, are generally identified disregarding tax provisions: see section 832‑30.
Note 2: An example is a test entity that is a partnership. In Australia, each partner in the partnership is a liable entity in respect of the income or profits