Section 121B — Income Tax Assessment Act 1936: Simplified outline

Scope of section (1) The following is a simplified outline of the Division. Main concepts (2) Subdivision B sets out the concepts used in the Division, the most important being: (a) OB activity (sections 121D, 121EA and 121EAA) together with the related definition of offshore person (section 121E); and (b) special income and allowable deduction definitions relating to OB activities (sections 121EDA to 121EF). Operative provisions (3) Subdivision C contains the operative provisions. Basically, they provide as follows: (d) income from OB activities is taken to be Australian sourced; (e) a deemed interest penalty applies to equity provided by an OBU’s resident owner; (f) income of OBU offshore investment trusts is exempt from tax; (g) income derived by overseas charitable institutions from OBUs is exempt from tax; (h) certain adjustments are made to the capital gains and losses that flow from disposals of certain interests in trusts of which an OBU is the trustee.