Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012

24 Ring-fenced cap on deduction
  • (1) Section DN 4(1) is replaced by:

    Amount of deduction: CFC not elective attributing CFC
    • (1) The deduction that a person is allowed in an income year for an attributed CFC loss from a CFC (the first CFC) that is not an elective attributing CFC for the person in the income year is no more than the total of—

      • (a) total attributed CFC income of the person for the income year from other CFCs, each of which is resident in the same country as the first CFC for the relevant accounting period:

      • (b) total FIF income of the person for the income year from FIFs,—

        • (i) each of which is resident in the same country as the first CFC for the relevant accounting period; and

        • (ii) for each of which the person uses the branch equivalent method.

    Amount of deduction: elective attributing CFC
    • (1B) The deduction that a person is allowed in an income year for an attributed CFC loss from a CFC (the first CFC) that is an elective attributing CFC for the person in the income year is no more than the total of—

      • (a) total attributed CFC income of the person for the income year from other CFCs, each of which—

        • (i) is resident in the same country as the first CFC for the relevant accounting period; and

        • (ii) is an elective attributing CFC for the person in the income year; and

        • (iii) has the same election commencement year as the first CFC:

      • (b) total FIF income of the person for the income year from FIFs, each of which—

        • (i) is resident in the same country as the first CFC for the relevant accounting period; and

        • (ii) is an elective attributing FIF for the person in the income year; and

        • (iii) has the same election commencement year as the first CFC.

    (2) In section DN 4(1)(b)(ii), branch equivalent method is replaced by attributable FIF income method.

    (3) In section DN 4(2), subsection (1) is replaced by subsection (1) or (1B) in each place where it occurs.

    (4) Section DN 4(3), other than the heading, is replaced by:

    • (3) Any excess not able to be deducted because of subsection (1) or (1B) is an attributed CFC net loss able to be used under sections IQ 2, IQ 4, and IQ 9 (which relate to the use of attributed CFC net losses).

    (5) In section DN 4, in the list of defined terms, election commencement year, elective attributing CFC, and elective attributing FIF are inserted.

    (6) Subsections (1), (3), and (4) apply for income years beginning on or after 1 July 2009.

    (7) Subsection (2) applies for income years beginning on or after 1 July 2011.