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An update on reform of the outbound investment rules


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.

Author profiles

Jane Michie
Photo of author, Jane MICHIE Jane is an Executive Director at Macquarie Group in the Taxation Division. She specialises in income tax issues, particularly international tax and the taxation aspects of the financial services industry. Jane is heavily involved in the consultation process with Treasury on the proposed changes to the anti-deferral measures. - Current at 10 November 2011
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Cameron Blackwood ATI
Cameron brings more than a decade of transactional tax expertise to his role as Director in Greenwoods & Herbert Smith Freehills’ Sydney office. He specialises in advising clients on the tax complexities of mergers, acquisitions and restructures, including cross-border issues and all aspects of employee share schemes, and regularly works in close collaboration with Herbert Smith Freehills. After joining Greenwoods & Herbert Smith Freehills as a graduate in 2004, Cameron built his corporate experience advising companies on a wide range of advisory and compliance matters, including a secondment to BHP Billiton. His industry knowledge is broad and includes the mining, real estate and financial services sectors. Cameron is a member of The Tax Institute’s Large Business and International Committee and the NSW Technical Committee. He holds a Bachelor of Business (Hons) and Bachelor of Laws (Hons) from the University of Technology Sydney, and a Master of Taxation from the University of Sydney. Cameron is admitted as a solicitor in New South Wales. - Current at 30 November 2020
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