Foreign income return form guide 2010-11

About this guide

The Foreign income return form guide contains an explanation of measures relating to the taxation of foreign income derived by, or attributed to, Australian residents.

For 2010-11 and later income years, the Foreign Investment Fund (FIF) and deemed present entitlement rules (sections 96B and C of the Income Tax Assessment Act 1936 (ITAA 1936) have been repealed. In relation to these measures, this guide deals only with aspects of ongoing relevance (for example, relief to prevent double taxation where FIF attribution has previously occurred).

For an explanation of the foreign income tax offset (FITO) measures see the Guide to foreign income tax offset rules (NAT 72923). The chapters in this guide are:

Chapter 1	Attribution of the current year profits of a controlled foreign company (CFC)
Chapter 2	Transferor trust and related measures
Chapter 3	Taxation of foreign dividends and branch profits
Chapter 4	Taxation of foreign investment fund (FIF) interests
Chapter 5	Proving your assessment
Chapter 6	Consolidation (consolidated income tax treatment for groups of entities)

Summary sheets at the end of this guide provide a quick reference to assist you in determining if and to what extent the measures apply to you. Where necessary, worksheets have also been provided to help you work out your tax liability.

Although the guide is quite detailed, it may not cover all the qualifications and conditions contained in the law that relate to your circumstances. For instance, it does not discuss the special rules that apply in working out attributable income for companies conducting banking or insurance activities.

If you are not sure about the application of the law, phone 13 28 66.

The Australian Taxation Office (ATO) regularly receives information from foreign tax authorities under our tax treaties regarding foreign source income paid to (and the tax withheld from) Australian resident taxpayers. We are making increasing use of information-matching technology to verify the correctness of tax returns. Ensure that all information is fully and correctly declared in the relevant tax return.

Unless otherwise stated, references in this guide to provisions of the law are to provisions of the ITAA 1936.

What's new?

In Media Release No 144 of 24 June 2010, the Assistant Treasurer announced that an anti-roll-up fund rule would apply from the repeal of the FIF measures (for 2010-11 and later income years).

Although draft legislation for this rule has been released, at the time of writing this publication legislation had not been enacted.

Go to www.treasury.gov.au or www.ato.gov.au for further details and updates.