Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1936 - SECT 121B

Scope of section

  (1)   The following is a simplified outline of the Division.

Main concepts

  (2)   Subdivision   B sets out the concepts used in the Division, the most important being:

  (a)   OB activity (sections   121D, 121EA and 121EAA) together with the related definition of offshore person (section   121E); and

  (b)   special income and allowable deduction definitions relating to OB activities (sections   121EDA to 121EF).

Operative provisions

  (3)   Subdivision   C contains the operative provisions. Basically, they provide as follows:

  (d)   income from OB activities is taken to be Australian sourced;

  (e)   a deemed interest penalty applies to equity provided by an OBU's resident owner;

  (f)   income of OBU offshore investment trusts is exempt from tax;

  (g)   income derived by overseas charitable institutions from OBUs is exempt from tax;

  (h)   certain adjustments are made to the capital gains and losses that flow from disposals of certain interests in trusts of which an OBU is the trustee.