Guide to foreign income tax offset rules 2010-11

Attributed foreign income

If you have attributed foreign income, you may be entitled to a foreign income tax offset for foreign income tax, income tax or withholding tax paid by the controlled foreign company (CFC) in which you hold an interest.

Specifically, a foreign income tax offset may arise:

• for a resident company that is an attributable taxpayer with a CFC interest and includes an amount in its assessable income under section 456 or 457 of the ITAA 1936
• for resident taxpayers that receive a distribution that is treated as non-assessable non-exempt (NANE) income under section 23AI or 23AK of the ITAA 1936.

In these circumstances, the attributable taxpayer is deemed to have paid foreign income tax in respect of their CFC interest, with the tax paid counting towards their tax offset. In their assessable income, the section 456 and 457 amounts must be grossed up by the amount of the foreign income tax that is deemed to have been paid.

For more information on the tax treatment of attributed income, refer to the publication Attributed foreign income.

Sections within Attributed foreign income

• Resident company with interest in CFC
• Foreign income tax paid on NANE income