Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
Chapter 11 - Technical corrections to foreign tax credit provisions
11.1 Schedule 11 to this bill contains the following minor amendment that ensures that provisions for the carry-forward of excess foreign tax credits operate properly following changes to the foreign tax credit provisions that were made as a result of the Timor Sea Treaty.
11.2 Unless otherwise stated, references to legislative provisions are references to provisions contained in the Income Tax Assessment Act 1936 (ITAA 1936).
11.3 Changes to the provisions dealing with the carry-forward of excess foreign tax credits are needed to ensure those provisions refer to the correct paragraphs in the general foreign tax credit provisions as these have been recently amended as a result of the Timor Sea Treaty.
11.4 A change to the numbering of paragraphs in subsection 160AF(1) of the ITAA 1936 (which is the general foreign tax credit provision) as a result of the Timor Sea Treaty has been reflected in the foreign tax credit carry-forward provisions (section 160AFE of the ITAA 1936).
11.5 Section 160AFE allows a taxpayer to carry forward excess foreign tax credits for five years.
11.6 The amendments to section 160AFE ensure the correct paragraphs in section 160AF are referenced. [Schedule 11, items 1 to 4, section 160AFE]
11.7 The amendments to section 160AFE are made as a consequence of the changes to section 160AF which were made as a result of the Timor Sea Treaty.
11.8 The amendments to section 160AFE (dealing with the carry forward of foreign tax credits) consequent on the changes to section 160AF will apply from the time that the new section 160AFE applies to each taxpayer. [Schedule 11, item 5]