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A resident company that is a member of a company group may transfer an excess credit to another member of the group if:
- there is 100% common ownership within the group
- there is a shortfall of foreign tax credits in a class of income for the company receiving the transfer
- the shortfall is for income of the same class as that for which there is an excess foreign tax credit in the company transferring the credit
- both companies retain a record of the transfer showing the credit transferred.
The transfer of an excess credit may include credit carried forward from five prior years as well as the current year. The transfer operates only for the following two classes of income:
- passive income
- other income - excluding offshore banking income.
A company can transfer only an amount equal to the credit shortfall for that class of income - that is, the transferee cannot carry forward the transferred amount.
Last modified: 05 Dec 2006QC 17522