(1) This section applies if:
(a) Australia has an agreement with one of the following (a treaty partner ):
(i) a foreign country or a constituent part of a foreign country;
(ii) an overseas territory; and
(b) the treaty partner taxes profits, or purports to tax profits, in accordance with, or consistent with the principles of:
(i) if the treaty partner is the United Kingdom--Article 9 of the United Kingdom convention; or
(ii) otherwise--a corresponding provision of another agreement.
Note: Article 9 of the United Kingdom convention deals with profits of associated enterprises.
(2) The object of this section is to prevent double taxation of the profits, to the extent that the Commissioner considers the taxation of the profits by the treaty partner to be in accordance with the agreement.
Adjustment of taxable income or tax loss
(3) The Commissioner may determine the amount of a taxpayer's taxable income or tax loss of a year of income to be an amount that is appropriate having regard to the object of this section.
Note: The Commissioner may amend an assessment at any time to give effect to this section: see subsection 170(11) of the Income Tax Assessment Act 1936 .