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D Net foreign income

Last updated 12 July 2020

Write at D assessable income derived by the fund from foreign sources - including New Zealand dividends and supplementary dividends that you:

  • 'gross up' by adding the foreign tax to give you the gross or pre-tax value, but
  • subtract expenses, including attributed foreign income.

Exclude net foreign source capital gains - include these at A Net capital gain.

Do not show negative amounts at D.

If the fund received franked distributions directly or indirectly from a New Zealand franking company, see Trans-Tasman imputation.

You can offset foreign source tax losses but not foreign capital losses. You offset foreign source tax losses only against foreign source income.

Any excess of such foreign source losses over foreign source income is quarantined, and may be carried forward to be offset against future foreign source income of the same class. Changes contained in Tax Laws Amendment (2007 Measures No. 4) Act 2007 about removing the quarantining of foreign losses do not affect this tax return - see What's new? for more information.

For more information on this process, see the Foreign income return form guide (NAT 1840).

Debt deductions that are not attributable to an overseas permanent establishment of the taxpayer are not quarantined to foreign income. Therefore, these deductions are not applied against foreign source income for the purposes of calculating net foreign income or identifying a foreign loss. Do not subtract these expenses in calculating the amount of net foreign income included at D. Write them as deductions at item 11 where relevant:

  • A Interest expenses within Australia
  • B Interest expenses overseas
  • I Investment expenses
  • J Management and administration expenses
  • L Other deductions.

Complete a Losses schedule 2008 if the fund has:

  • claimed a deduction for foreign source losses greater than $100,000
  • 'current year' foreign source losses greater than $100,000
  • foreign source losses carried forward to later income years greater than $100,000
  • claimed a deduction for prior year controlled foreign company (CFC) losses greater than $100,000
  • 'current year' CFC losses greater than $100,000
  • CFC losses carried forward to later income years greater than $100,000.

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