You will have an excess foreign tax credit for an income year if the amount of foreign tax you have paid in respect of a class of foreign income exceeds the Australian tax payable on that class of foreign income.
You may carry forward an excess foreign tax credit for the 5 years immediately following the income year when it arose. You may only use the excess credit for a class of foreign income if there is a credit shortfall for the same class of income in a later year. A credit shortfall occurs if the credit allowed for a class of income is less than the Australian tax payable on that class of income.
You cannot claim a foreign tax credit in the year that you incur a loss for a class of foreign income because the Australian tax payable for that class of income is nil. You may, however, carry forward the foreign tax credit to a later year to apply to the same class of income.
You will need to keep your own records of your excess foreign tax credits if you are carrying the credits forward to a later date.If you are an Australian resident individual and have paid foreign tax on income you received from outside Australia, this guide will help you to claim a credit for that foreign tax. NAT 2338-06.2002