International tax — review of the foreign source income anti-tax-deferral
(attribution) regimes
Revenue ($m)
2008-09 2009-10 2010-11 2011-12 2012-13
Australian Taxation Office - - * * *
The Government will reform Australia’s anti-tax-deferral (attribution) regimes which
ensure that residents can not accumulate income offshore and thereby defer, or even
avoid, Australian tax, with effect for income years on or after Royal Assent to the
legislation. This measure will have an ongoing unquantifiable revenue impact.
These changes implement most of the recommendations of the Board of Taxation
review of the attribution regimes.
To implement the Board’s recommendations, the Government will:
• modernise the controlled foreign company (CFC) provisions and rewrite them into
the Income Tax Assessment Act 1997;
• repeal and replace the foreign investment fund (FIF) provisions with a specific
narrowly defined anti-avoidance rule;
• repeal the deemed present entitlement rules; and
• amend the transferor trust rules to enhance their effectiveness and improve their
integrity.
The operation of these regimes has, over time, become inefficient, and in light of
growing global interactions, poorly targeted. The compliance costs imposed are
disproportionate to the integrity risk to the revenue. The reforms will reduce
compliance costs for affected businesses and help ensure that Australia’s managed
funds remain competitive in global financial markets.
The Government will consult on the implementation of these reforms.