ATO guidance
ATO guidance on foreign resident capital gains withholding tax
The ATO amended its instructions to taxpayers seeking a reduced withholding tax rate on the sale of property on 6 December 2016.
The amended instructions include examples of the supporting information that should be included in an application, which is dependent on the reasons for variation of rate.
Non-portfolio dividend exemption participation test
The ATO has released two draft taxation determinations regarding the application of Subdivision 768-A of the Income Tax Assessment Act 1997 (Cth) (ITAA97) to Australian corporate tax entities which are either a partner of a partnership (TD 2016/D6) or a beneficiary of a trust (TD 2016/D7). The determinations consider the same issue, being whether these partners or beneficiaries can hold a direct control interest within the meaning of section 350 of the ITAA97.
The draft determinations state that partnerships and trusts can be taken to ‘hold’ a direct control interest in a foreign company for the purpose of satisfying the 10% participation test in s 768-15.
Accordingly, depending on their own participation in the partnership or trust, if a partner or beneficiary Australian corporate tax entity receives a distribution from a foreign company, section 768-5 may deem the distribution is non-assessable non-exempt income.
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