Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) Subject to subsection (5), a company is a foreign hybrid company in relation to an income year if:
(a) at all times during the income year when the company is in existence, the partnership treatment requirements for the income year in subsection (2) or (3) are satisfied; and
(b) at no time during the income year is the company, for the purposes of a law of any foreign country that imposes * foreign income tax (except * credit absorption tax or * unitary tax) on entities because they are residents of the foreign country, a resident of that country; and
(c) at no time during the income year is the company an Australian resident; and
(d) disregarding this Division, in relation to the same income year of another taxpayer:
(i) the company is a * CFC at the end of a * statutory accounting period that ends in the income year; and
(ii) at the end of the statutory accounting period, the taxpayer is an * attributable taxpayer in relation to the CFC with an * attribution percentage greater than nil.
Partnership treatment requirements specific to USA
(2) For the purposes of paragraph (1)(a), the partnership treatment requirements are satisfied if:
(a) the company was formed in the United States of America; and
(b) for the purposes of the law of that country relating to * foreign income tax (except * credit absorption tax or * unitary tax) imposed by that country, the company is a limited liability company that:
(i) is treated as a partnership; or
(ii) is an eligible entity that is disregarded as an entity separate from its owner.
Partnership treatment requirements relating to any foreign country
(3) For the purposes of paragraph (1)(a), the partnership treatment requirements are also satisfied if:
(a) the company was formed in a foreign country (which may be the United States of America); and
(b) for the purposes of the law of that country relating to * foreign income tax (except * credit absorption tax or * unitary tax) imposed by that country, the company is treated as a partnership; and
(c) regulations are in force setting out requirements to be satisfied by a company in relation to the income year for the purposes of this paragraph, and the company satisfies those requirements.
(4) Regulations for the purposes of paragraph (3)(c) cannot set out requirements in relation to any income year before the one in which the regulations are made.
(5) If a shareholder is not an * attributable taxpayer in relation to a company, then, for the purposes of applying the Income Tax Assessment Act 1936 and this Act in relation to the shareholder's * share or shares in the company, the company is a foreign hybrid company in relation to an income year for the shareholder if, and only if, the shareholder:
(a) has made an election under former subsection 485AA(2) of the Income Tax Assessment Act 1936 ; or
(b) makes an election under this paragraph;
in relation to the shareholder's share or shares in the company.
(6) For the purposes of subsection (5), the company is a foreign hybrid company in relation to any income year during which the election referred to in paragraph (5)(a) or (5)(b) is in force.
(7) An election can only be made under paragraph (5)(b) if:
(a) in relation to the income year in which the election is made, the company:
(i) is a FIF (within the meaning of former Part XI of the Income Tax Assessment Act 1936 ); and
(ii) satisfies paragraphs (1)(a) to (c); and
(b) at the end of the income year in which the election is made, the shareholder's interest in the FIF consists of one or more * shares in the FIF.
(8) An election under paragraph (5)(b) must be made:
(a) on or before the day on which the shareholder lodges the shareholder's income tax return for the income year; or
(b) within a further time allowed by the Commissioner.
(9) The election:
(a) is in force during the income year and all later income years; and
(b) is irrevocable.
Note: The normal partnership provisions will apply of their own force to foreign hybrids that are foreign hybrid limited partnerships.
Table of sections
830 - 20 Treatment of company as a partnership
830 - 25 Partners are the shareholders in the company
830 - 30 Individual interest of a partner in net income etc. equals percentage of notional distribution of company's profits
830 - 35 Partner's interest in assets
830 - 40 Control and disposal of share in partnership income