INCOME TAX ASSESSMENT ACT 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 770 - Foreign income tax offsets  

Subdivision 770-B - Amount of foreign income tax offset  

Operative provisions

SECTION 770-75   Foreign income tax offset limit  

770-75(1)  
There is a limit (the offset limit ) on the amount of your *tax offset for a year. If your tax offset exceeds the offset limit, reduce the offset by the amount of the excess.

770-75(2)  
Your offset limit is the greater of:


(a) $1,000; and


(b) this amount:


(i) the amount of income tax payable by you for the income year; less

(ii) the amount of income tax that would be payable by you for the income year if the assumptions in subsection (4) were made.
Note 1:

If you do not intend to claim a foreign income tax offset of more than $1,000 for the year, you do not need to work out the amount under paragraph (b).

Note 2:

The amount of the offset limit might be increased under section 770-80 .

770-75(3)  
For the purposes of paragraph (2)(b), work out the amount of income tax payable by you, or that would be payable by you, disregarding any *tax offsets.

770-75(4)  
Assume that:


(a) your assessable income did not include:


(i) so much of any amount included in your assessable income as represents an amount in respect of which you paid *foreign income tax that counts towards the *tax offset for the year; and

(ii) any other amounts of *ordinary income or *statutory income from a source other than an *Australian source; and


(b) you were not entitled to any deductions that:


(i) are *debt deductions that are attributable to an *overseas permanent establishment of yours; or

(ii) are deductions (other than debt deductions) that are reasonably related to amounts covered by paragraph (a) for that year.
Note:

You must also assume you were not entitled to any deductions for certain converted foreign losses: see section 770-35 of the Income Tax (Transitional Provisions) Act 1997 .

Example:

If an entity has paid foreign income tax on a capital gain that comprises part of its net capital gain, only that capital gain on which foreign income tax has been paid is disregarded.


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