Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) An amount of income or profits is dual inclusion income if 2 or more of the following outcomes arise for the amount:
(a) it is * subject to Australian income tax in an income year;
(b) it is * subject to foreign income tax in a foreign country in a * foreign tax period;
(c) it is subject to foreign income tax in a foreign country (other than the country mentioned in paragraph (b)) in a foreign tax period.
Note: In certain circumstances, dual inclusion income can be applied to reduce the neutralising amount for a hybrid payer mismatch (see section 832 - 330) or a deducting hybrid mismatch (see section 832 - 560).
(1A) In determining for the purposes of subsection (1) whether an amount of income or profits is * subject to Australian income tax, disregard subsection 832 - 125(2) (which is about when an amount included in the assessable income of a trust or partnership is subject to Australian income tax), so far as it applies in relation to assessable income from a foreign source.
Effect of Australian foreign income tax offset for underlying taxes
(2) For the purposes of subsection (1), if:
(a) an amount of assessable income of a * corporate tax entity (the assessable amount ) would, apart from this subsection and subsection (1A), be * subject to Australian income tax; and
(b) an amount of * foreign income tax (except a tax covered by subsection 832 - 130(7)) paid in respect of the assessable amount counts towards a * tax offset for an entity under Division 770;
then:
(c) if the amount of the tax offset equals or exceeds the amount of * tax that would, having regard only to the assessable amount and the rate at which tax is imposed on the entity, be payable on the assessable amount--the assessable amount is treated as if it were not subject to Australian income tax; and
(d) if the amount of the tax offset is a proportion of the amount of that tax--then that proportion of the assessable amount is treated as if it were not subject to Australian income tax.
Effect of credits etc. for underlying taxes
(3) In determining for the purposes of subsection (1) whether an amount of income or profits is * subject to foreign income tax in a * foreign tax period, disregard subsection 832 - 130(3).
Extension for certain on - payments through grouped entities
(4) Subsection (5) applies, if:
(a) an entity is a member of a dual inclusion income group in a country (see subsection (6)); and
(b) an amount of income or profits of the entity (the on - payment amount ) is a payment received by the entity from another member of the dual inclusion income group at a time; and
(c) it is reasonable to conclude that the payment was funded by an amount of income or profits of the other member (the funding income or profits ); and
(d) it is reasonable to conclude that the funding income or profits were:
(i) if the country mentioned in paragraph (a) is Australia-- * subject to Australian income tax; or
(ii) if the country mentioned in paragraph (a) is a foreign country-- * subject to foreign income tax in the foreign country; and
(e) the funding income or profits were not * dual inclusion income under subsection (1) (disregarding subsection (5)) in the country.
(4A) In determining whether paragraph (4)(d) is satisfied, have regard to any previous application of subsection (5).
(5) For the purposes of subsection (1), the on - payment amount is treated as if it were:
(a) if the country mentioned in paragraph (4)(a) is Australia-- * subject to Australian income tax in the income year in which the time mentioned in paragraph (4)(b) occurs; or
(b) if the country mentioned in paragraph (4)(a) is a foreign country-- * subject to foreign income tax in the foreign country in the * foreign tax period in which the time mentioned in paragraph (4)(b) occurs.
(6) Two or more entities (the member entities ) are members of a group (a dual inclusion income group ) in a country for the purposes of this Division if in that country:
(a) the same entity or entities are * liable entities in respect of the income or profits of each of the member entities; and
(b) no other entity is a liable entity in respect of the income or profits of any of the member entities.
Note: For example, entities that are members of a consolidated group or MEC group.
When an entity is eligible to apply dual inclusion income
(7) An entity is eligible to apply an amount of * dual inclusion income if the amount is income or profits of:
(a) the entity; or
(b) if paragraph (a) does not apply and the entity is a member of a dual inclusion income group in any country--an entity that is a member of the dual inclusion income group.
(8) However, an entity is not eligible to apply the amount if it has already been applied by any entity by a previous application of a provision of this Division.
Interaction with other provisions
(9) To avoid doubt, if a provision of this section has the effect that an amount is treated for the purposes of subsection (1) as if it were * subject to Australian income tax, or * subject to foreign income tax, then that effect extends to another provision of this Act that refers to an amount that is (as the case requires):
(a) subject to Australian income tax for the purposes of subsection (1) of this section; or
(b) subject to foreign income tax for the purposes of subsection (1) of this section.
Note: For example, an amount that would not be subject to Australian income tax for the purposes of subsection (1) apart from subsection (1A) satisfies paragraphs 832 - 330(2)(b) and (3)(b) and subparagraph 832 - 335(1)(b)(ii).