Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 770.10

  (1)   You are entitled to a * tax offset for an income year for * foreign income tax. An amount of foreign income tax counts towards the tax offset for the year if you paid it in respect of an amount that is all or part of an amount included in your assessable income for the year.

Note 1:   The offset is for the income year in which your assessable income included an amount in respect of which you paid foreign income tax--even if you paid the foreign income tax in another income year.

Note 2:   If the foreign income tax has been paid on an amount that is part non - assessable non - exempt income and part assessable income for you for the income year, only a proportionate share of the foreign income tax (the share that corresponds to the part that is assessable income) will count towards the tax offset (excluding the operation of subsection   (2)).

Taxes paid on section   23AI or 23AK amounts

  (2)   An amount of * foreign income tax counts towards the * tax offset for you for the year if you paid it in respect of an amount that is your * non - assessable non - exempt income under either section   23AI or 23AK of the Income Tax Assessment Act 1936 for the year.

Note 1:   Sections   23AI and 23AK of the Income Tax Assessment Act 1936 provide that amounts paid out of income previously attributed from a controlled foreign company or a foreign investment fund are non - assessable non - exempt income.

Note 2:   Foreign income taxes covered by this subsection are direct taxes (for example, a withholding tax on a dividend payment) and not underlying taxes, only some of which are covered by section   770 - 135.

Exception for certain residence - based foreign income taxes

  (3)   An amount of * foreign income tax you paid does not count towards the * tax offset for the year if you paid it:

  (a)   to a foreign country because you are a resident of that country for the purposes of a law relating to the foreign income tax; and

  (b)   in respect of an amount derived from a source outside that country.

Exception for previously complying funds and previously foreign funds

  (4)   An amount of * foreign income tax paid by a * superannuation provider in relation to a * superannuation fund does not count towards the * tax offset for the year if:

  (a)   the tax was paid in respect of an amount included in the fund's assessable income under table item   2 or 3 in section   295 - 320; and

  (b)   the provider paid the tax before the start of the income year.

Note:   Table items   2 and 3 in section   295 - 320 include additional amounts in the assessable income of superannuation funds that change their status from complying to non - complying or from foreign to Australian.

Exception for credit absorption tax and unitary tax

  (5)   An amount of * credit absorption tax or * unitary tax you paid does not count towards the * tax offset for the year.