Task 3: International tax: 4 Marks

Instruction: Each of the following resident taxpayers hold shares in foreign companies.In each case explain whether the attributable income of Controlled Foreign Company (CFC) provisions apply.

Scenario 1: Carlos holds 60% of the shares in a private company incorporated and located in the USA. The remaining 40% of the shares are held by Joseph, also an Australia resident. The company derives over $3 million of income from a range of investments

Scenario 2: Anand holds 25% of the shares in a private company based in Vanuatu. The remaining shares are held by 3 other Australian residents. The company derives in excess of $4 million of income from various share and real estate holdings

Scenario 3: Christopher holds 40% of the shares in a private company based in Jamaica. The remaining shares are held by 2 other Australian residents. The company derives its income from the growing and harvesting of tropical fruits on land held in Jamaica.

Scenario 4: Ushan holds 40% of the shares in a private company located in Sri Lanka. The remaining shares are held by Sri Lankan residents. Bolt controls the voting power within the company. The company's annual income of $6 million is derived from a range of Australian share and real estate holdings.