Legislation and related measures
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The foreign income tax offset system was introduced by the Tax Laws Amendment (2007 Measures No. 4) Act 2007, and replaces the foreign tax credit rules in former Divisions 18, 18A and 19 of the ITAA 1936.
The foreign income tax offset rules apply to income years starting on or after 1 July 2008. For most taxpayers, that means it will apply to their 2008-09 income year onwards. However, for taxpayers with substituted accounting periods that have early balancing dates (in lieu of 30 June), the rules will not apply until their 2009-10 income year.
The amending Act also repealed the quarantining of foreign losses, which are no longer quarantined according to particular classes of foreign assessable income, or quarantined against other income. There are also transitional rules that permit certain pre-existing foreign losses of a taxpayer to be converted into an ordinary tax loss and deducted against a taxpayer's assessable income, subject to an annual deduction limit.
Last modified: 23 Jul 2009QC 22894