INCOME TAX ASSESSMENT ACT 1936
Pt IVA inserted by No 110 of 1981.
Scheme for a purpose including obtaining a tax benefit etc.
Without limiting section 177D, this Part also applies to a scheme if:
(a) under, or in connection with, the scheme:
(i) a foreign entity makes a supply to an Australian customer of the foreign entity; and
(ii) activities are undertaken in Australia directly in connection with the supply; and
(iii) some or all of those activities are undertaken by an Australian entity who, or are undertaken at or through an Australian permanent establishment of an entity who, is an associate of or is commercially dependent on the foreign entity; and
(iv) the foreign entity derives ordinary income, or statutory income, from the supply; and
(v) some or all of that income is not attributable to an Australian permanent establishment of the foreign entity; and
(b) it would be concluded (having regard to the matters in subsection (2)) that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a principal purpose of, or for more than one principal purpose that includes a purpose of:
(i) enabling a taxpayer (a relevant taxpayer) to obtain a tax benefit, or both to obtain a tax benefit and to reduce one or more of the relevant taxpayer's liabilities to tax under a foreign law, in connection with the scheme; or
whether or not that person who entered into or carried out the scheme or any part of the scheme is the relevant taxpayer or is the other taxpayer or one of the other taxpayers; and
(ii) enabling the relevant taxpayer and another taxpayer (or other taxpayers) each to obtain a tax benefit, or both to obtain a tax benefit and to reduce one or more of their liabilities to tax under a foreign law, in connection with the scheme;
(c) the foreign entity is a significant global entity for a year of income in which the relevant taxpayer, or one or more other taxpayers, would (but for this Part):
(i) obtain a tax benefit; or
in connection with the scheme.
(ii) reduce one or more of their liabilities to tax under a foreign law;
Have regard to certain matters
For the purposes of paragraph (1)(b), have regard to the following matters:
(a) the matters in subsection 177D(2);
(b) the extent to which the activities that contribute to bringing about the contract for the supply are performed, and are able to be performed, by:
(i) the foreign entity; or
(ii) another entity referred to in subparagraph (1)(a)(iii); or
(iii) any other entities;
(c) the result, in relation to the operation of any foreign law relating to taxation, that (but for this Part) would be achieved by the scheme.
Deferral of foreign tax liabilities
For the purposes of paragraph (1)(b), a deferral of a taxpayer's liabilities to tax under a foreign law is taken to be a reduction of those liabilities, unless there are reasonable commercial grounds for the deferral.
Despite subsection (1), this Part applies to the scheme because of this section only if the relevant taxpayer has obtained, or would but for section 177F obtain, a tax benefit in connection with the scheme.
Commissioner not required to enquire into foreign tax matters
The Commissioner is required to have regard to a matter referred to in paragraph (2)(c) only so far as information relevant to that matter is available to the Commissioner, and is not required to acquire further information in order to have regard to that matter.
Schemes outside Australia
This section applies whether or not the scheme has been or is entered into or carried out in Australia or outside Australia or partly in Australia and partly outside Australia.
S 177DA inserted by No 170 of 2015, s 3 and Sch 2 item 4, effective 11 December 2015. No 170 of 2015, s 3 and Sch 2 item 7 contains the following application provision:
(1) The amendments made by this Schedule apply on or after 1 January 2016 in connection with a scheme, whether or not the scheme was entered into, or was commenced to be carried out, before that day.
(2) Despite subitem (1), the amendments made by this Schedule do not apply in relation to tax benefits that a taxpayer derives before that day.