Published on 01 Apr 11
by "THE TAX SPECIALIST" JOURNAL ARTICLE
Australia is currently undertaking a comprehensive project on reforming its "anti-tax-deferral" rules, in particular, the controlled foreign company rules, the foreign investment fund rules, the transferor trust rules, the deemed present entitlement rules and the exemption for the repatriation of profits to corporate taxpayers. The Board of Taxation has been instrumental in reviewing, and recommending changes, to these anti-tax-deferral rules. The purpose of this paper is to examine the Board's proposals and the Treasury proposals contained in its July 2010 Discussion Paper. Treasury has subsequently released a further draft of CFC and FAF rules in February 2011 – these changes are not reflected in this article. The paper deals with each group of issues examined in the Treasury Papers. These are: the operative principles at the basis of the new CFC regime; which taxpayers should be within/outside the regime; the nature of the concept of control of "controlled foreign companies"; what kinds of interests are covered by the CFC regime; timing issues; what kinds of income will be "attributable income" and whether, if the CFC has derived "attributable income", the computation of that income; and other consequential taxation issues.