7‑160 Meaning of Undistributed Net GloBE7‑160 Meaning of Undistributed Net GloBE Income Account

7‑160 Meaning of Undistributed Net GloBE Income Account

(1) This section applies if: (a) an election under subsection 7‑145(1) applies to: (i) an Investment Entity that is a Constituent Entity of an MNE Group; and (ii) a Fiscal Year (the tested year); and (b) the Investment Entity has GloBE Income for the tested year. (2) At the end of the tested year, an Undistributed Net GloBE Income Account is established for the Investment Entity for the tested year. (3) At the end of the tested year, the balance of the Undistributed Net GloBE Income Account is the Investment Entity’s GloBE Income for the tested year, reduced (but not below zero) by applying the following against that balance: (a) the Investment Entity’s Covered Taxes (if any) for the tested year; (b) distributions and deemed distributions in the tested year to shareholders other than Constituent Entities that are Investment Entities. (4) For the purposes of subsection (5), this subsection covers a Fiscal Year if the Fiscal Year is the first, second or third Fiscal Year after the tested year. (5) At the end of a Fiscal Year covered by subsection (4), reduce the balance of the Undistributed Net GloBE Income Account for the Investment Entity for the tested year (but not below zero) by applying the following against that balance: (a) the Investment Entity’s Covered Taxes (if any) for the Fiscal Year; (b) distributions and deemed distributions in the Fiscal Year to shareholders other than Constituent Entities that are Investment Entities; (c) if the Investment Entity has a GloBE Loss for the Fiscal Year—the GloBE Loss; (d) if the Investment Entity has a GloBE Loss for a previous Fiscal Year covered by subsection (3)—the GloBE Loss, to the extent that it has not been applied under a previous operation of paragraph (c) or this paragraph. (6) For the purposes of subsection (5): (a) apply an amount mentioned in paragraph (5)(a) before applying an amount mentioned in paragraph (5)(b); and (b) apply an amount mentioned in paragraph (5)(b) before applying an amount mentioned in paragraph (5)(c); and (c) apply an amount mentioned in paragraph (5)(c) before applying an amount mentioned in paragraph (5)(d). (7) For the purposes of paragraph (5)(d), apply a GloBE Loss for an earlier Fiscal Year before applying a GloBE Loss for a later Fiscal Year.