(1) This Act applies to you as if you had paid an amount of * foreign income tax in respect of an amount (a taxed amount ) that is all or part of an amount included in your * ordinary income or * statutory income if you are covered by subsection (2) or (3) for an amount of foreign income tax paid in respect of the taxed amount.
(2) You are covered by this subsection for an amount of * foreign income tax paid in respect of a taxed amount if that foreign income tax has been paid in respect of the taxed amount by another entity under an * arrangement with you or under the law relating to the foreign income tax.
Example: You are a partner in a partnership and the partnership pays foreign income tax on the partnership income.
(3) You are covered by this subsection for an amount of * foreign income tax paid in respect of the taxed amount to the extent that:
(a) the taxed amount is taken, because of section 6B of the Income Tax Assessment Act 1936 (the 1936 Act ), to be attributable to another amount of income of a particular kind or source; and
(b) foreign income tax has been paid in respect of the other amount of income; and
(c) the taxed amount is less than it would have been if that tax had not been paid.
Example: Aust Co (an Australian resident) is the sole beneficiary of an Australian resident trust H and is presently entitled to all the income of trust H. Trust H owns shares in For Co (a foreign company). For Co pays a dividend to trust H and the dividend is subject to withholding tax in For Co's country of residence.
Trust H allocates to Aust Co, the dividend, as well as other Australian source income trust H earned in the year (none of which was subject to foreign income tax). Aust Co is treated as having paid the foreign income tax paid by For Co under subsection 770-130(3). The foreign income tax is treated as paid in respect of the amount included in Aust Co's assessable income that is attributable to the dividend.