Taxes Consolidation Act 1997 section 111AU

Election to treat investment entity as tax transparent entity

Section 111AU provides for an election to treat an investment entity as a tax transparent entity, where the entity's owners are taxed under a fair market value or similar regime at a rate that meets or exceeds the minimum tax rate.

• A filing constituent entity may elect to have an investment entity treated as tax transparent, provided the entity-owner is taxed on annual changes in fair value of its ownership interest at a rate equal to or exceeding the minimum tax rate.
• Indirect ownership through another investment entity qualifies for this treatment if the owner is subject to a fair market value regime on its direct interest in the intermediary entity.
• The election must be made in accordance with section 111AAAD.
• If the election is withdrawn, gains or losses on disposal of assets or liabilities held by the investment entity are calculated based on fair market value as at the first day of the fiscal year in which the withdrawal takes effect.

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