Income and gains derived by foreign companies that are controlled by Australian residents. This includes passive income, for example dividends, interest, royalties and capital gains, generally. Rules also apply to certain services income and business income from related party transactions with Australian residents. Income is tested via substance analysis and operates on an entity-by entity approach.
There are two key exemptions from the attribution of CFC income. 
First exemption: where the CFC is a resident of a country with a tax system comparable to Australia’s tax system. This is referred to as a ‘listed’ country (Canada, France, Germany, Japan, NZ, UK, US) and means only certain income can be attributed to the Australian taxpayer. 
Second exemption: where the CFC passes the active income test, which requires the ‘tainted income ratio’ of the CFC to be less than 5 per cent.