Credits available to resident companies for direct and underlying tax



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  • An Australian resident company which receives a dividend from a related company is entitled to a credit for the direct foreign tax - for example, withholding tax - on the dividend received.

This credit will generally be available only if the dividend is included in assessable income. The only exception is where a dividend is received from a related foreign company and is treated as paid out of income previously attributed to the resident company under the accruals tax system. A tax credit can be claimed for both the direct foreign tax and underlying tax on these non-assessable non-exempt dividends.

Last modified: 05 Dec 2006QC 18000