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Item 19 - Foreign entities

Click this link to open the Item 19 - Foreign entities on the ATO website.

There are three questions at item 19 which are mandatory for every tax return prepared. For convenience, the answer is defaulted to No. Consider whether you need to change it to Yes.

Temporary residents do not need to show foreign investment income at this item.

Label I - Did you have either a direct or indirect interest in a controlled foreign company (CFC)?

The controlled foreign company (CFC) measures may apply to income and gains of foreign companies in which the taxpayer had a direct or indirect controlling interest, or which he/she effectively controlled.

If the taxpayer had, alone or with associates, direct or indirect controlling interests totaling 10% or more in a foreign company or have effective control of a foreign company, the question must be answered Yes.

Label K - CFC income

If the answer to the CFC question, label I, is YES, an amount must be entered at label K.

Amounts entered at labels K or B, must also be included in the Foreign income worksheet (for) for the correct calculation of taxable income and any Foreign tax credit allowable to the taxpayer.

Label W - Did you, at any time, directly or indirectly transfer or cause the transfer of property (including money) or services to a non-resident trust?
If the answer to the label W question is 'Yes', then an amount must be entered at label B.
Label B - Transfer of trust income

If the answer to the label W question is YES, an amount must be entered and you must complete an Other attachments schedule (att) and lodge it via PLS or, if lodging on paper, with the return. Include the taxpayer's name, address, TFN, the name of the non-resident trust and its trustee or trustees, and the amount of any attributable income in relation to the trust.

The transferor trust measures may apply if, at any time you directly or indirectly transferred or caused the transfer of property, including money, or services to a non-resident trust. A trust is a non-resident trust if no trustee of the trust estate was an Australian resident and, trust estate‚Äôs central management and control was not in Australia at any time during the income year. Refer to the Foreign Income return guide available on the ATO website.

Amounts entered at labels K or B, must also be included in the Foreign income worksheet (for) for the correct calculation of taxable income and any Foreign tax credit allowable to the taxpayer. MYOB Tax automates the transfer of these amounts to the foreign income worksheet (for) and advises that you open the FITO worksheet to check that the correct values have been passed.

CCH References

21-140 Attributable taxpayer

21-190 Attribution of CFC income to attributable taxpayers

21-200 Attributable income of a CFC

21-290 Accruals taxation of non-resident trust income

21-300 Transferor trust measures

21-310 Attributable taxpayers - non-resident trusts

21-330 Amounts included in assessable income of attributable taxpayers

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