ATO Interpretative Decision
ATO ID 2004/353 (Withdrawn)
Superannuation
Superannuation: foreign tax credits - tax paid by overseas superannuation fundFOI status: may be released
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This ATO ID is withdrawn as it is a simple restatement of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
If a payment is made from an off-shore superannuation fund to a resident taxpayer and that payment is included in the taxpayer's assessable income under section 27CAA of the Income Tax Assessment Act 1936 (ITAA 1936), will a credit be allowed under section 160AF of the ITAA 1936 for tax paid by the fund in the foreign country?
Decision
No. A credit will not be allowed under section 160AF of the ITAA 1936 for tax paid by the fund in the foreign country because the taxpayer did not pay the tax and was not personally liable for that tax.
Facts
The taxpayer intends transferring their superannuation entitlement from an eligible non-resident non-complying superannuation fund (an overseas fund) to a resident complying superannuation fund (an Australian fund).
The overseas fund has paid some tax on the fund income.
Reasons for Decision
Subsection 160AF(1) of the ITAA 1936 provides that a resident taxpayer, whose assessable income includes foreign income on which the taxpayer has personally paid foreign tax, is entitled to a credit against the Australian tax payable of the amount of that foreign tax, up to the amount of Australian tax payable on the foreign income.
In this case, the taxpayer has not paid any foreign tax on that income, nor were they personally liable for that tax.
Subsection 6AB(3) of the ITAA 1936 deems a taxpayer to have been personally liable for, and to have paid foreign tax, where the taxpayer has derived foreign income and the tax on that income has effectively been paid on the taxpayer's behalf:
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- by another person under an arrangement with the taxpayer, or under the tax law of the foreign country;
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- by a trust estate if the taxpayer is a beneficiary;
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- by a partnership if the taxpayer is a partner;
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- by deduction; or
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- by the taxpayer's spouse, where the tax is levied on, and paid by, the taxpayer's spouse.
In this case, the tax paid by the overseas fund was not in relation to the amount that will be assessable to the taxpayer under section 27CAA of the ITAA 1936.
The taxpayer is not entitled to a foreign tax credit.
Date of decision: 8 September 2003
Legislative References:
Income Tax Assessment Act 1936
section 6AB
section 27CAA
section 160AF
Related Public Rulings (including Determinations)
Taxation Ruling TR 2003/12
ATO ID 2004/352
Keywords
Foreign tax credits
Non resident superannuation funds
Superannuation, retirement and employment termination
Superannuation
ISSN: 1445-2782