Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) The active foreign business asset percentage of the foreign company in relation to the holding company, at the time of the CGT event, is worked out under this section in this way.
Method statement
Step 1. Work out the foreign company's average value of total assets at that time under subsection (2).
Step 2. Work out the foreign company's average value of active foreign business assets at that time under subsection (3).
Step 3. Divide the result of step 2 by the result of step 1.
Step 4. Express the result of step 3 as a percentage, and round that percentage to the nearest whole percentage point (rounding a number ending in .5 upwards).
Step 5. The active foreign business asset percentage is:
(a) if the result of step 4 is less than 10%--zero; or
(b) if the result of step 4 is 10% or more, but less than 90%--that result; or
(c) if the result of step 4 is 90% or more--100%.
Note: If the foreign company is a member of a wholly - owned group, section 768 - 535 may modify the way in which this section operates.
(2) The foreign company's average value of total assets at the time of the CGT event is worked out in this way.
Method statement
Step 1. Work out the sum of the values (see subsection (5)) of every * asset included in the total assets of the foreign company at the end of the most recent period:
(a) that ends no later than that time, but no more than 12 months before that time; and
(b) for which the foreign company has * recognised company accounts.
Step 2. Work out the sum of the values (see subsection (5)) of every * asset included in the total assets of the foreign company at the end of the most recent period:
(a) that ends at least 6 months, but no more than 18 months, before the end of the period mentioned in step 1; and
(b) for which the foreign company has * recognised company accounts.
Note: See subsection (6) if the foreign company does not have recognised company accounts for a period mentioned in this step.
Step 3. Work out the sum of the results of steps 1 and 2, and divide that sum by 2.
(3) The foreign company's average value of active foreign business assets at that time is worked out in this way.
Method statement
Step 1. Work out the sum of the values (see subsections (4) and (5)) of every * active foreign business asset of the foreign company at the end of the most recent period:
(a) that ends no later than that time, but no more than 12 months before that time; and
(b) for which the foreign company has * recognised company accounts.
Step 2. Work out the sum of the values (see subsections (4) and (5)) of every * active foreign business asset of the foreign company at the end of the most recent period:
(a) that ends at least 6 months, but no more than 18 months, before the end of the period mentioned in step 1; and
(b) for which the foreign company has * recognised company accounts.
Note: See subsection (6) if the foreign company does not have recognised company accounts for a period mentioned in this step.
Step 3. Work out the sum of the results of steps 1 and 2, and divide that sum by 2.
Note: If the foreign company is a foreign life insurance company or a foreign general insurance company, the results of steps 1 and 2 are modified under section 768 - 530.
(4) If an * active foreign business asset of the foreign company is a * share in another company (the subsidiary company ) that is a foreign resident, then, for the purposes of steps 1 and 2 of the method statement in subsection (3), treat the value of the share at a particular time according to the following table.
Value of a share in subsidiary company | ||
Item | If: | |
1 | (a) the foreign company has a * direct voting percentage of 10% or more in the subsidiary company at that time; and (b) the holding company has a * total voting percentage of 10% or more in the subsidiary company at that time | the * share's value (see subsection (5)) at that time, multiplied by the * active foreign business asset percentage of the subsidiary company in relation to the holding company at that time |
2 | item 1 does not apply | zero |
Note: For the purposes of item 1 of the table, it is necessary to work out the active foreign business asset percentage of the subsidiary company before working out the active foreign business asset percentage of the foreign company.
(5) For the purposes of this section, the value of an asset of a foreign company at the end of a period is taken to be:
(a) the value of the asset as shown in the * recognised company accounts of the foreign company for that period; or
(b) if the value of the asset is not shown in the recognised company accounts of the foreign company for that period--zero.
(6) The result of:
(a) step 2 of the method statement in subsection (2); and
(b) step 2 of the method statement in subsection (3);
is taken to be zero if the foreign company does not have * recognised company accounts for a period mentioned in those steps.
Note: This will only be the case if the foreign company was not in existence before the start of the period mentioned in step 1 of those method statements (see paragraph 768 - 510(3)(c)).