• Part B: Foreign tax credit information.

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention
    1. This Part contains information relevant to determining the Australian resident unitholder's entitlement to foreign tax credits under Division 18, Part III of the ITAA 1936.
    2. The foreign tax credit entitlement needs to be determined by the unitholder separately for each class of foreign income. The foreign tax credit for each class cannot be more than the Australian tax applicable to that class of taxable foreign income. Due to these requirements Part A cannot simply identify the unitholder's share of foreign tax paid by the trustee as the amount to claim at label 19O (foreign tax credits) in the unitholder's return.

    Full details are set out in the Tax Office publication How to claim a foreign tax credit.

    1. Foreign income categories
      Part B assumes that 'passive income' and 'other income' are the relevant foreign income categories for foreign tax credit purposes under subsection 160AF(7) of the ITAA 1936 for managed funds. If this is not the case, additional information will need to be provided.
    2. Passive income
      This is defined in section 160AEA of the ITAA 1936.
    3. Foreign capital gains
      Fund managers should only show foreign capital gains and attached foreign tax paid in Part B if the capital gain is deemed to be foreign source income under subsection 160AE(2) of the ITAA 1936.

    Therefore, do not show a foreign capital gain in Part B if:

    • no foreign tax was paid in relation to that capital gain, or
    • the foreign capital gain is not included in the net income of the trust estate.
     
    1. The break up of the foreign net capital gains that are included in passive income is necessary for determining the unitholder's foreign tax credit entitlement, as per subsection 160AE(2) and section 160AF of the ITAA 1936. For example, the unitholder may have offset losses against gross capital gains such that no foreign capital gain is ultimately included in the unitholder's assessable income as per subsection 160AE(2). In these circumstances, the unitholder would have no foreign tax credit entitlement in relation to their share of the foreign tax paid by the trustee.
    Last modified: 23 Dec 2005QC 18149