Regulation 64

no election in regulation 63 is in effect in relation to C and D;

C is not an investment entity or insurance investment entity; and

taking into account taxes on distributions and taxes incurred by D in respect of income distributed to C, C may reasonably be expected to be subject to tax (in the jurisdiction where it is located) on distributions from D at a rate equal to or exceeding 15%.

any distribution or deemed distribution from D to C in the subject FY must be included in the FANIL of C for the subject FY;

the FANIL of C for the subject FY must be adjusted so that —

any tax credit of C in respect of tax payable by D on the income that was distributed to C in the subject FY, is accounted for as income (and not as a negative amount of tax expense); and

such tax payable by D is included in C’s qualifying current tax expense (and not D’s) for the subject FY;

C’s share of D’s undistributed income amount for the third financial year before the subject FY is treated as D’s GloBE income for the subject FY, and the product of that share and the minimum rate is treated as a top‑up amount for D for the subject FY; and

C’s share of D’s GloBE income or loss for the subject FY must be disregarded for the purpose of computing D’s top‑up amount under section 24, and (except as provided in sub‑paragraph (b)) the adjusted covered taxes attributable to such income must be disregarded in computing D’s effective tax rate under section 24 or the effective tax rate for any other entity under section 17.

the covered taxes payable by D for that third financial year;

the sum of the distributions and deemed distributions by D to its shareholders (not being investment entities or insurance investment entities) in the period comprising the subject FY and the 3 preceding financial years;

the sum of any negative amount of D’s GloBE income or loss for each financial year in the period in sub-paragraph (b);

the remaining negative amount of D’s GloBE income or loss not deducted in arriving at D’s undistributed income amount for a financial year in a previous application of sub‑paragraph (c) or this sub‑paragraph,except that —

no amount in sub-paragraphs (a) to (d) is to be deducted if it has already been deducted in determining D’s undistributed income amount for any financial year in a previous application of this regulation; and

if the amount determined by this paragraph is negative, the amount is treated as zero.

E is the sum of C’s share of D’s undistributed income amount for each of the following financial years:

the financial year in which the transfer took place (transfer FY);

the first financial year and the second financial year before the transfer FY (transfer FY‑1 and transfer FY‑2, respectively);

F is the value of the direct ownership interest in D transferred by C; and

G is the value of all the direct ownership interests in D held by C before the transfer.

the covered taxes payable by D for that financial year;

the sum of distributions and deemed distributions (excluding any deemed distribution referred to in paragraph (6)) by D to its shareholders (not being investment entities or insurance investment entities) in the following period:

where the financial year is transfer FY — the period comprising transfer FY;

where the financial year is transfer FY-1 — the period comprising transfer FY‑1 and transfer FY;

where the financial year is transfer FY‑2 — the period comprising transfer FY‑2, transfer FY‑1 and transfer FY;

the sum of any negative amount of D’s GloBE income or loss for each financial year in the period in sub‑paragraph (b);

the remaining negative amount of D’s GloBE income or loss not deducted in arriving at D’s undistributed income amount for a financial year in a previous application of sub‑paragraph (c) or this sub‑paragraph,except that —

no amount in sub-paragraphs (a) to (d) is to be deducted if it has already been deducted in determining D’s undistributed income amount for any financial year in a previous application of this regulation; and

if the amount determined by this paragraph is negative, the amount is treated as zero.

the sum of C’s share of D’s undistributed income amount for each of the 3 financial years (FY‑3, FY‑2 and FY‑1, respectively) before the first financial year for which the election ceases to apply; and

the minimum rate,is treated as a top-up amount for D for the first financial year for which the election ceases to apply.

the covered taxes payable by D for that financial year;

the sum of distributions and deemed distributions by D to its shareholders (not being investment entities or insurance investment entities) in the following period:

where the financial year is FY-1 — the period comprising FY‑1;

where the financial year is FY-2 — the period comprising FY‑2 and FY‑1;

where the financial year is FY‑3 — the period comprising FY‑3, FY‑2 and FY‑1;

the sum of any negative amount of D’s GloBE income or loss for each financial year in the period in sub‑paragraph (b);

the remaining negative amount of D’s GloBE income or loss not deducted in arriving at D’s undistributed income amount for a financial year in a previous application of sub‑paragraph (c) or this sub‑paragraph,except that —

no amount in sub-paragraphs (a) to (d) is to be deducted if it has already been deducted in determining D’s undistributed income amount for any financial year in a previous application of this regulation; and

if the amount determined by this paragraph is negative, the amount is treated as zero.