Foreign tax credit



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

End of attention

The foreign tax credit is the credit you can claim on the amount included in your assessable income for the distribution made by the non-resident trust.

Example 6

Unlisted country trust estate

During the 2003-04 income year, a resident individual received a distribution of $10,000 from an unlisted country trust estate. The entire amount was included in the taxpayer's assessable income under section 99B. The distribution was paid from $20,000 foreign income derived by the trust in the 1998-99 income year. The income was not subject to tax in a listed country and the trust paid foreign tax of $5,000.

Interest is payable on the distributed amount of $10,000 grossed up by the amount of foreign tax relating to the distributed amount - $3,333 - multiplied by the applicable rate of tax - 47% - less the amount of foreign tax credit.

($13,333 x 47%) - $3,333 = $2,934

Note: The foreign tax credit is worked out by allocating, on a pro rata basis, the foreign tax paid by the trust estate on its foreign income. The profits and income of the trust estate that were available for distribution were:

$20,000 - $5,000


Amount of the distribution


Foreign tax attributable to the distribution =


$10,000 x $5,000



Last modified: 05 Dec 2006QC 18000