For the purposes of this Part, a partnership is an Australian partnership at a particular time if at least one of the partners is an Australian entity at that time.
338 Australian trust
For the purposes of this Part, a trust is an Australian trust at a particular time (in this section called the test time) if:
(a) at any time in the period of 12 months immediately before the test time:
(i) any trustee of the trust was a Part X Australian resident; or
(ii) the central management and control of the trust was in Australia; or
(b) the trust is a public trading trust for the purposes of Division 6C of Part III, in relation to the year of income of the trust in which the test time occurs.
Subdivision B—Controlled foreign entities (CFEs)
339 Controlled foreign entity (CFE)
Each of the following is a CFE (or controlled foreign entity):
(a) a CFC (or controlled foreign company);
(b) a CFP (or controlled foreign partnership);
(c) a CFT (or controlled foreign trust).
340 Controlled foreign company (CFC)
A company is a CFC at a particular time if, at that time, the company is a resident of a listed country or of an unlisted country and any of the following paragraphs applies:
(a) at that time, there is a group of 5 or fewer Australian 1% entities the aggregate of whose associate‑inclusive control interests in the company is not less than 50%;
(b) both of the following subparagraphs apply:
(i) at that time, there is a single Australian entity (in this paragraph called the assumed controller) whose associate‑inclusive control interest in the company is not less than 40%;
(ii) at that time, the company is not controlled by a group of entities not being or including the assumed controller or any of its associates;
(c) at that time, the company is controlled by a group of 5 or fewer Australian entities, either alone or together with associates (whether or not any associate is also an Australian entity).
341 Controlled foreign partnership (CFP)
A partnership is a CFP at a particular time if:
(a) the partnership is not an Australian partnership at that time; and
(b) at least one of the partners is a CFE at that time.
342 Controlled foreign trust (CFT)
A trust is a CFT at a particular time if, at that time, the trust is not an Australian trust and:
(a) there is an eligible transferor in respect of the trust; or
(b) there is a group of 5 or fewer Australian 1% entities the aggregate of whose associate‑inclusive control interests in the trust is not less than 50%.
Subdivision C—Eligible transferors in relation to trusts
343 Interpretation
In this Subdivision, unless the contrary intention appears:
actual transfer, in relation to property or services, means a transfer of the property or services other than a transfer that is taken to have been made because of subsection 345(1), (2), (5), (6), (8), (10) or (11).
property includes money.
scheme has the same meaning as in Division 6AAA of Part III.
services has the same meaning as in Division 6AAA of Part III.
transfer has the same meaning as in Division 6AAA of Part III.
underlying transfer, in relation to a transfer of property or services to a trust, means:
(a) if that transfer was an actual transfer—the actual transfer; or
(b) if that transfer was taken to have been made because of subsection 345(1)—the actual transfer referred to in that subsection; or
(c) if that transfer was taken to have been made because of subsection 345(2)—the actual transfer referred to in paragraph 345(2)(d); or
(d) if that transfer was taken to have been made because of subsection 345(5)—the actual transfer referred to in paragraph 345(5)(b); or
(e) if that transfer was taken to have been made because of the application of subsection 345(6) or (8) to an actual transfer—the actual transfer; or
(f) if that transfer was taken to have been made because of the application of subsection 345(6) or (8) to a transfer that was taken to have been made because of subsection 345(1)—the actual transfer referred to in subsection 345(1); or
(g) if that transfer was taken to have been made because of the application of subsection 345(6) or (8) to a transfer that was taken to have been made because of subsection 345(5)—the actual transfer referred to in paragraph 345(5)(b); or
(h) if that transfer was taken to have been made because of subsection 345(10)—the actual transfer referred to in paragraph 345(10)(b); or
(j) if that transfer was taken to have been made because of one or more applications of subsection 345(11) to an actual transfer—the actual transfer; or
(k) if that transfer was taken to have been made because of one or more applications of subsection 345(11) to a transfer (in this paragraph called the deemed transfer) that was taken to have been made because of subsection 345(1), (2), (5), (6), (8) or (10)—the actual transfer that, under a preceding paragraph of this definition, is the underlying transfer in relation to the deemed transfer.
344 References to transfer of property or services
(1) A reference in this Subdivision to the transfer of property or services to a trust includes a reference to the transfer of property or services by way of the creation of the trust.
(2) For the purposes of this Subdivision, where an entity acquires property that did not previously exist, the property is taken to have existed immediately before the acquisition and to have been acquired from the entity who created the property.
(3) For the purposes of this Subdivision, property or services are to be taken to have been transferred to an entity if the property or services have been applied for the benefit of, or in accordance with the directions of, the entity.
(4) Without limiting the generality of subsection (3), a reference in that subsection to the application of property or services for the benefit of an entity includes a reference to the application of property or services in the discharge, in whole or in part, of a debt due by the entity.
(5) A reference in this Subdivision to a transfer of property or services to an entity includes a reference to a transfer made before the commencement of this Subdivision.
(6) A reference in this Subdivision to the transfer of property or services to a trust does not include a reference to a transfer made by the trustee of the estate of a deceased person under:
(a) the terms of the deceased person’s will or codicil; or
(b) an order of a court that varied or modified the provisions of a deceased person’s will or codicil;
unless:
(c) the transfer was made in or as a result of the exercise (by the trustee or any other person) of a power of appointment or any other discretion; or
(d) under subsection 345(1), the property or services are taken to have been transferred by an entity other than the trustee, instead of by the trustee; or
(e) under subsection 345(5), the Commissioner treats the property or services as having been (to any extent) transferred by an entity other than the trustee, instead of by the trustee.
345 Deemed transfers of property or services
(1) For the purposes of this Subdivision, where an entity (in this subsection called the prime entity) causes another entity to actually transfer property or services to a trust, the prime entity (instead of the other entity) is to be taken to have transferred the property or services to the trust.
(2) For the purposes of this Subdivision, where:
(a) the trustee of a trust issues units in the trust to an entity (in this subsection called the first entity) in the first entity’s capacity as a manager, underwriter or dealer in relation to the marketing or placement of the units; and
(b) in the course of the marketing or placement of the units, the units are disposed of by the first entity to another entity (in this subsection called the second entity); and
(c) at a particular time (in this subsection called the second entity’s transfer time), the second entity transfers property or services to the first entity as consideration for the acquisition of the units; and
(d) the first entity has actually transferred, or actually transfers, property or services (in this subsection called the original property or services) to the trust for the sole purpose of acquiring the units;
the second entity is taken to have transferred the original property or services (instead of the first entity) at the second entity’s transfer time.
(3) A reference in subsection (2) to a unit in a trust is a reference to an interest (however described) in any of the income or property of the trust.
(4) Subsections (1) and (2) do not limit the operation of subsection (5).
(5) Where, under a scheme:
(a) an entity (in this subsection called the scheme entity) actually transfers property or services to another entity; and
(b) property or services are actually transferred to a trust at a particular time otherwise than by the scheme entity;
the Commissioner may, for the purposes of this Subdivision, treat the property or services mentioned in paragraph (b) as having been transferred by the scheme entity (instead of by any other entity) to the trust at that time.
(6) Where:
(a) apart from subsections (8), (10) and (11), a partnership transfers property or services to a trust at a particular time (in this subsection called the transfer time); and
(b) at a later time (in this subsection called the cessation time), the partnership ceases to exist for the purposes of this Act;
then, for the purpose of determining whether an entity that was a partner in the partnership immediately before the cessation time is an eligible transferor in relation to the trust at a time after the cessation time, each such partner is to be taken to have transferred the original property or services to the trust at the transfer time.
(7) Nothing in subsection (6) affects the application of this Subdivision to the transfer made by the partnership concerned.
(8) For the purposes of this Subdivision, if:
(a) apart from this subsection and subsections (6), (10) and (11), a discretionary trust (in this subsection called the transferor trust) transfers property or services (in this subsection called the original property or services) to another trust (in this subsection called the transferee trust) at a particular time (in this subsection called the transfer time); and
(b) at a later time (in this subsection called the cessation time), the transferor trust commences to be wound up or ceases to exist for the purposes of this Act; and
(c) apart from this subsection and subsections (6), (10) and (11), one or more other entities transferred property or services to the transferor trust at or before the transfer time;
each of those other entities is to be taken to have transferred the original property or services to the transferee trust at the transfer time.
(9) Nothing in subsection (8) affects the application of this Subdivision to the transfer mentioned in paragraph (8)(a).
(10) For the purposes of this Subdivision, where:
(a) any of the following subparagraphs applies:
(i) any of the following events occurs in relation to a company (which company is in this subsection called the transferor):
(A) the company passes a resolution for its winding‑up;
(B) an order is made for the winding‑up of the company;
(C) any similar event;
(ii) a partnership (in this subsection also called the transferor) ceases to exist for the purposes of this Act;
(iii) either of the following sub‑subparagraphs applies in relation to the trustee of a trust (in this subsection also called the transferor):
(A) the trust commences to be wound‑up;
(B) the trust estate ceases to exist for the purposes of this Act; and
(b) an actual transfer of property or services is made to a trust (in this subsection called the transferee) as a consequence of the transferor being wound‑up or ceasing to exist;
the transferor is taken to have transferred to the transferee the property or services concerned.
(11) Where:
(a) the following subparagraphs apply to an entity (in this subsection called the defunct entity):
(i) the defunct entity is a company, partnership or trust;
(ii) the defunct entity transferred property or services (in this subsection called the original property or services) to a trust (including a transfer that was taken to have been made because of another application or applications of this subsection) at a particular time (in this subsection called the transfer time);
(iii) if the defunct entity is a company—the company passes a resolution for its winding‑up, an order is made for the winding‑up of the company or a similar event occurs;
(iv) if the defunct entity is a partnership—the partnership ceases to exist for the purposes of this Act;
(v) if the defunct entity is a trust—the trust commences to be wound up or ceases to exist for the purposes of this Act; and
(b) the Commissioner is satisfied that an entity (in this subsection called the successor entity) has benefited or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting (either directly or indirectly through one or more interposed companies, partnerships or trusts) as a result of a transfer of property or services made by the defunct entity or a transfer of property or services made as a consequence of the defunct entity being wound up or ceasing to exist; and
(c) the Commissioner is of the opinion that it is appropriate to apply this subsection to the successor entity;
then, for the purpose of determining whether the successor entity is an eligible transferor in relation to the trust referred to in subparagraph (a)(ii) at a time after the transfer time, the successor entity is to be taken to have transferred the original property or services to that trust.
346 Circumstances in which a transfer of property or services is an eligible business transaction
An underlying transfer of property or services to a trust is an eligible business transaction if, and only if, at or about the time of the transfer, identical or similar property or services were transferred by the transferor in the ordinary course of business to ordinary clients or customers under arm’s length transactions in similar circumstances and subject to identical or similar terms and conditions as those that applied in relation to the underlying transfer of the property or services concerned.
347 Eligible transferor in relation to a discretionary trust
(1) An entity (in this section called the transferor entity) is an eligible transferor in relation to a discretionary trust at a particular time (in this section called the test time) if the trust is not a public unit trust at the test time and:
(a) all of the following subparagraphs apply:
(i) the transferor entity transferred property or services to the trust at a time (in this subparagraph called the transfer time) at or after the IP time and before the test time;
(ii) if the underlying transfer was made in the course of carrying on a business—the underlying transfer was not an eligible business transaction;
(iii) if the underlying transfer was made under an arm’s length transaction otherwise than in the course of carrying on a business—the transferor entity was in a position, at any time after the transfer time and before the test time, to control the trust; or
(b) all of the following subparagraphs apply:
(i) the transferor entity transferred property or services to the trust at any time before the IP time;
(ii) the underlying transfer was not an eligible business transaction;
(iii) at any time after the IP time and before the test time, the entity was in a position to control the trust;
and, at the test time, the transferor entity is an Australian entity or a CFE.
(2) For the purposes of this section, an entity is taken to be in a position to control a trust if, and only if:
(a) a group in relation to the entity had the power by means of the exercise by the group of any power of appointment or revocation or otherwise, to obtain, with or without the consent of any other entity, the beneficial enjoyment of the corpus or income of the trust; or
(b) a group in relation to the entity was able in any manner whatsoever, whether directly or indirectly, to control the application of the corpus or income of the trust; or
(c) a group in relation to the entity was capable under a scheme of gaining the enjoyment or the control referred to in paragraph (a) or (b); or
(d) a trustee of the trust was accustomed or under an obligation (whether formally or informally) or might reasonably be expected to act in accordance with the directions, instructions or wishes of a group in relation to the entity; or
(e) a group in relation to the entity was able to remove or appoint the trustee, or any of the trustees, of the trust.
(3) A reference in subsection (2) to a group in relation to an entity is a reference to any of the following:
(a) the entity acting alone;
(b) an associate of the entity acting alone;
(c) the entity and one or more associates of the entity acting together;
(d) 2 or more associates of the entity acting together.
348 Eligible transferor in relation to a non‑discretionary trust or a public unit trust
(1) An entity is an eligible transferor in relation to a non‑discretionary trust or a public unit trust at a particular time (in this section called the test time) if:
(a) the transferor entity transferred property or services to the trust at or after the IP time and before the test time; and
(b) the underlying transfer was made for no consideration or for a consideration less than the arm’s length amount in relation to the underlying transfer; and
(c) it is not the case that the sole purpose of the underlying transfer was the acquisition of units in the trust where the parties to the underlying transfer were at arm’s length with each other in relation to the underlying transfer and the trust was a public unit trust at the test time;