ATO Interpretative Decision
ATO ID 2002/623 (Withdrawn)
Income Tax
Calculation of a prior year loss for a non residentFOI status: may be released
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This ATO ID is withdrawn. Guidance relating to the issue addressed in this ATO ID can be found under What income you pay tax on at ato.gov.au (QC 33208).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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is Australian sourced interest income derived by a non resident included in their assessable income for the purposes of calculating a tax loss under section 36-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. Australian sourced interest income derived by a non resident is not included in their assessable income for the purposes of calculating a tax loss under section 36-10 of the ITAA 1997.
Facts
The taxpayer is a resident of Australia for tax purposes in the current year of income.
The taxpayer was a non resident in the immediate prior income year, which as after the 1997 year of income.
While a non resident, the taxpayer owned a rental property in Australia.
The rental property incurred a tax loss in the immediate prior income year.
The taxpayer also earned Australian sourced interest income while a non resident and withholding tax was deducted from that interest.
Reasons for Decision
A tax loss is calculated under section 36-10 of the ITAA 1997. That section provides that the tax loss is calculated by subtracting the taxpayer's total assessable income from the total of the amounts that they are able to deduct for the income year (except any losses from earlier income years).
Subsection 36-10(3) of the ITAA 1997 provides that if the taxpayer derived exempt income then the taxpayer must also subtract their net exempt income to determine their tax loss.
The assessable income of a non resident includes income from Australian sources (subsection 6-5(3) of the ITAA 1997). Amounts of Australian sourced interest and dividends are subject to withholding tax and are exempt income of a non resident taxpayer (section 128D of the Income Tax Assessment Act 1936) and therefore does not form part of their assessable income.
Net exempt income is defined in section 36-20 of the ITAA 1997. Paragraph 36-20(2)(a) of the ITAA 1997 provides that the net exempt income of a non resident does not include exempt income which is subject to withholding tax.
As the interest income received by the taxpayer was subject to withholding tax it does not form part of their assessable income nor their net exempt income for the purposes of calculating their tax loss under section 36-10 of the ITAA 1997.
Date of decision: 30 January 2002Year of income: Year ending 30 June 2003
Legislative References:
Income Tax Assessment Act 1936
section 128D
subsection 6-5(3)
section 36-10
subsection 36-10(3)
section 36-20
paragraph 36-20(2)(a) Related ATO Interpretative Decisions
ATO ID 2002/471
Keywords
Carry forward losses
Deductions and expenses
Prior year losses
Resident/residency
ISSN: 1445-2782
| Date: | Version: | |
| 30 January 2002 | Original statement | |
| You are here | 23 June 2017 | Archived |