Taxation Ruling

IT 2507

Income tax : foreign tax credit system - foreign taxes eligible for credit against australian income tax

  • Please note that the PDF version is the authorised version of this ruling.

FOI status:

May be releasedFOI number: I 1211455

PREAMBLE

Taxation Ruling No. IT 2437 sets out the relevant legislative provisions and general criteria which apply in determining whether a foreign tax is a creditable tax under the general foreign tax credit system (FTCS).

2. That Ruling contains a non-exhaustive list of foreign taxes which are recognised as creditable taxes. Paragraph 7 of the Ruling foreshadows periodical updates of that list - in the form of future Rulings incorporating an updated consolidated list of creditable taxes - as a consequence of changes in other countries' taxes and as other foreign taxes are admitted as creditable taxes. This Ruling represents the first such update.

3. While the issue of this Ruling in that form will obviate the need for reference back to the list of creditable taxes contained in IT 2437, the comments in the Preamble to that Ruling concerning the relevant statutory provisions and guidelines for creditable tax determinations remain pertinent. In particular, it is emphasised that taxpayers who seek credit for foreign taxes not identified in this Ruling (or in the subsequent Rulings) should supply the following details of those taxes in the relevant income tax returns:

.
the precise title of the tax;
.
the title of the law under which the tax is imposed;
.
whether the tax is levied by a national, state or local authority and the name of that authority; and
.
a description of the nature of the tax and the basis for its implementation.

4. Decisions as to whether particular foreign taxes not included in this Ruling (or in subsequent Rulings) are creditable taxes under the FTCS will continue to be taken in National Office. Branch Offices should therefore refer enquiries received, or claims in returns, in relation to such taxes to National Office for consideration and advice. It would also continue to assist with the processing of returns if taxpayers were to supply relevant details to National Office as soon as a liability to pay such a foreign tax becomes apparent.

RULING

5. Subject to the provisions of Division 18 of Part III of the Income Tax Assessment Act 1936, a taxpayer will be entitled to a credit against Australian tax payable on foreign income for any of the foreign taxes listed below paid in respect of that income (changes and additions to the taxes listed in IT 2437 are marked with an asterisk):

ARGENTINA
Income tax (Impuesto a las ganancias)
Tax on casual gains (Impuesto sobre los beneficios eventuales)
AUSTRIA
Income tax (Einkommensteuer)
Corporation tax (Korperschaftsteuer)
Tax on Interest Yields (Zinserstragsteuer)
Directors' tax (Aufsichtsratsabgabe)
Tax on commercial and industrial enterprises (Gewerbesteuer), only where levied on a basis other than capital or the sum of wages
BANGLADESH
Income tax
BELGIUM
Individual income tax (impot des personnes physiques/personen belasting)
Corporate income tax (impot des societes/vennootschapsbelasting)
Income tax on legal entities (impot des personnes morales/rechtspersonenbelasting)
Income tax on non-residents (impot des non-residents/belasting der nietverb-lijfhouders)
including the prepayments, the surcharges on these taxes and prepayments, and the communal supplement to the individual income tax.
BRAZIL
Income tax (Imposto de renda)
Withholding tax on pure income, e.g. interest or dividends
Supplementary tax (Imposto suplementar), where charged on dividends or branch profits arising in Brazil
Payments to the development funds PIN and PIS (Programa de integracao nacional/social) and MOBRAL (Fundacao moviments brasileiro de alfabetizacao)
BRUNEI
Income tax
Petroleum income tax
BURMA
Income tax
CANADA

Federal:
Income taxes imposed by the Government of Canada
Provincial:

ALBERTA
Provincial income tax
BRITISH COLUMBIA
Provincial income tax
Mining tax
Mineral resource tax
Logging tax
MANITOBA
Provincial income tax
NEW BRUNSWICK
Provincial income tax
Mining tax
NEWFOUNDLAND
Provincial income tax
Mining tax
NOVA SCOTIA
Provincial income tax
Mining tax
ONTARIO
Provincial corporation tax on company profits
Provincial income tax on individuals
Mining tax
PRINCE EDWARD ISLAND
Provincial income tax
QUEBEC
Provincial corporation tax on company profits
Provincial income tax on individuals
Mining tax
Logging tax
SASKATCHEWAN
Provincial income tax
Mining royalty tax

CHILE
Income tax (Impuesto a la renta)
Additional tax (Impuesto adicional)
Additional tax (Tasa adicional)
CHINA
Individual income tax
Income tax concerning joint ventures with Chinese and foreign investment
Income tax concerning foreign enterprises
Local income tax
COOK ISLANDS
* Income tax (including withholding tax)
CYPRUS
Income tax
Special contributions under Law 55 of 1974 and subsequent annual extensions
CZECHOSLOVAKIA
Tax on profits (Dan ze zisku)
Artists' tax (Dan z prijmu literarni a umelecke cinnosti)
DENMARK
Income taxes to the State and to the municipalities (indkomstskatterne til staten og til kommunerne)
FINLAND
State income tax
Communal tax
Church tax
Tax withheld at source from non-residents' income
FRANCE
Income tax and corporation tax including any withholding tax, prepayment (precompte) or advance payment with respect to the aforesaid taxes.
FRENCH POLYNESIA (TAHITI)
Corporation tax (Impot sur les benefices des societes)
Territorial solidarity tax (Prelevement territorial de solidarite)
Extraordinary solidarity tax (Prelevement exceptionnel de solidarite)
FIJI
Income tax (including basic tax and normal tax)
Non-resident dividend withholding tax
Interest withholding tax
Royalty withholding tax
Dividend tax
Land sales tax
GERMAN DEMOCRATIC REPUBLIC
Corporation tax (korperschaftsteuer)
Trade tax (Gewerbesteuer) to the extent that it is computed by reference to trading profits
Wages tax (Lohnsteuer)
GERMANY (FEDERAL REPUBLIC)
Income tax (Einkommensteuer) including the surcharge (Erganzungsabgabe) thereon
Corporation tax (korperschaftsteuer) including the surcharge (Erganzungsabgabe) thereon
Trade tax (Gewerbesteuer) only where it is levied on a basis other than capital or pay-roll
GHANA
* Income tax
GREECE
Income tax, including schedular or analytical tax
HONG KONG
Tax on earnings, profits and interest, comprising:
- salaries tax
- profits tax
- interest tax
HUNGARY
Income taxes (a jovedelemadok)
Profit taxes (a nyeresegadok)
Enterprises special tax (a vallalati kulonado)
Contribution to communal development (a kozsegf-ejlesztesi hozzajarulas)
Levy on dividends and profit distributions of commercial companies (a kereskedelmi tarsasagok osztalek es nyereseg kifizetesei utani illetek)
INDIA
Income tax, including any surcharge thereon
Income tax and super tax levied by States on agricultural income
Surtax imposed on chargeable profits of companies
INDONESIA
Income tax (pajak pendapatan)
Company tax (pajak perseroan)
Withholding tax on interest, dividends and royalties (pajak atas bunga, dividen dan royalty)
IRELAND
Income tax
Corporation tax
Capital gains tax
ISRAEL
Income tax (including capital gains tax)
Company tax
Tax on gains from the sale of land under the Land Appreciation Tax Law
ITALY
Individual income tax (Imposta sul reddito delle persone fisiche
Corporate income tax (Imposta sul reddito delle persone giuridiche) even if they are collected by withholding taxes at source
Local tax on income (Imposta locale sui redditi)
Communal tax on capital appreciation of real property (Imposta comunale sull incremento di valore degli imm (INVIM)), where charged on a capital gain also chargeable in Australia.
JAPAN
Income tax
Corporation tax
Enterprise tax, so far as payable on profits or income
Local (prefectural or municipal) inhabitant taxes, so far as payable on profits, income or chargeable gains from sources in Japan
JERSEY
* Income tax
KENYA
Income tax
REPUBLIC OF KIRIBATI
* Income tax
REPUBLIC OF KOREA
Income tax
Corporation tax
Inhabitant tax
Defence tax, where charged by reference to income tax or corporation tax
LIBERIA
* Income tax
LUXEMBOURG
Income tax on individuals (Impot sur le revenu des personnes physiques)
Tax on fees of directors of companies (Impot sur les tantiemes)
Corporation tax (Impot sur le revenu des collectivites)
Tax on the total amount of wages and salaries (Impot commercial communal Y compris limpot sur le total des salaries), except in so far as it is computed on a basis other than profits
MACAU
Complementary tax on income (Imposto comp-lementar de rendimentos)
MALAYSIA
Income tax and excess profit tax
Supplementary income taxes (i.e. tin profits tax, development tax and timber profits tax)
Petroleum income tax
Real property gains tax
MALTA
Income tax, including prepayments of tax, whether made by deduction at source or otherwise
MEXICO
Income tax
Federal District tax on income from capital (Impuesto sobre productos de capitales)
Federal District surcharge, in so far as charged on the tax above
MONACO
Tax on profits (Impot sur les benefices)
NETHERLANDS
Income tax (Inkomstenbelasting)
Wages tax (Loonbelasting)
Corporation tax (vennootschapsbelasting)
Dividend tax (Dividend belasting)
NEW ZEALAND
Income tax
Excess retention tax
* Non-resident withholding tax
NIGERIA
* Personal income tax
NIUE
* Income tax
NORWAY
National tax on income (Inntektsskatt til staten)
County municipal tax on income (Inntektsskatt til fylkeskommunen)
Municipal tax on income (Inntektsskatt til kommunen)
National contributions to the Tax Equalisation Fund (Fellesskatt til Skattefordelingsfondet)
National tax relating to income from the exploration for and the exploitation of submarine petroleum resources and activities and work relating thereto, including pipeline transport of petroleum produced (Skatt til staten vedrorende inntekt og formue i forbindelse med undersokelse etter og utnyttelse av undersjoiske petroleumsforekomster og dertil knyttet virksomhet og arbeid, herunder rorledningstransport av utvunnet petroleum)
National dues on remuneration to non-resident artistes (avgift til staten av honorarer som tilfaller kunstnere bosatt i utlandet)
Seamen's tax (Sjomannsskatt)
PAKISTAN
Income tax
Super tax
PAPUA NEW GUINEA
The Income tax imposed under the law of Papua New Guinea, including:

. salary or wages tax;
. additional profits tax upon taxable additional profits from mining operations;
. additional profits tax upon taxable additional profits from petroleum operations;
. specific gains tax upon taxable specific gains; and
. dividend withholding tax upon taxable dividend income.

PHILIPPINES
Income tax imposed by the Government of the Republic of the Philippines
POLAND
Income tax (podatek dochodowy)
Tax on wages and salaries (podatek ad wynagrodzen)
Surcharge on the income tax or on the tax on wages or salaries (podatek wyrownawczy)
PORTUGAL
Agricultural tax (Imposto sobre a industria agricola)
Industrial tax (Contribuicao industrial)
Tax on income from capital (Imposto de capitais)
Professional tax (Imposto profissional)
Complementary tax (Imposto complementar)
Tax on capital gains (Imposto de mais-valias)
Any surcharges on the preceding taxes
ROMANIA
Tax on incomes derived by individuals and corporate bodies (Impozitul pe veniturile realizate de persoane fizice si juridice)
Tax on the profits of joint companies constituted with the participation of some Romanian economic organisations and some foreign partners (Impozitul pe beneficiile societatilor mixte constituite cu participare romana si straina)
Tax on income realised from agricultural activities (Impozitul pe veniturile realizate din activitati agricole)
SINGAPORE
Income tax
SOLOMON ISLANDS
Income tax
SOUTH AFRICA
Normal tax (the general income tax)
Non-resident shareholders' tax
Undistributed profits tax
Non-residents' tax on interest
* Non-residents' tax on royalties
SPAIN
Individual income tax (Impuesto sobre la renta de las personas fisicas)
Company tax (Impuesto sobre sociedades)
Local taxes on income
* Chamber of Commerce surcharge based on admissible taxes
SRI LANKA
Income tax
SWEDEN
State income tax including sailors' tax and coupon tax
Tax on undistributed profits of companies and the tax on distribution in connection with reduction of share capital or the winding-up of a company
Tax on public entertainers
Communal income tax
SWITZERLAND
The Federal, cantonal and communal taxes on income (total income, earned income, income from capital, industrial and commercial profits and other items of income)
TAIWAN
Business income tax
Personal income tax
Withholding tax on interest
Withholding tax on dividends
THAILAND
Income tax
Petroleum income tax
TURKEY
Income tax, including withholding or "stoppage" tax where charged on net profits
Corporation tax, where charged on net profits
TUVALU
Income tax
UNITED KINGDOM
Income tax (including surtax)
Corporation tax
Capital gains tax
UNITED STATES OF AMERICA
Federal : Federal income taxes imposed by the Internal Revenue Code, but excluding the accumulated earnings tax and the personal holding company tax
* Contributions under the Federal Insurance Contributions Act (FICA)
State or other : As detailed below, but note that any state or other tax which may be construed as a unitary tax (as defined by subsection 6AB(6) of the Australian Income Tax Assessment Act) is not creditable

ALABAMA
Income tax on individuals
General income tax
ALASKA
General income tax
ARIZONA
General income tax
ARKANSAS
Income tax
CALIFORNIA
Bank and corporation income tax
* Bank and corporation franchise tax
Excise (income) tax, except where it represents a minimum levy
Personal income tax
Insurance companies tax on marine insurance companies
COLORADO
General income tax
Excise (income) tax
CONNECTICUT
Corporation business tax where it is charged on income
DELAWARE
Corporation income tax
Personal income tax
DISTRICT OF COLUMBIA
Individual and corporate income tax
FLORIDA
Corporation income tax
GEORGIA
General income tax
HAWAII
General income tax
IDAHO
General income tax
ILLINOIS
Income tax
Corporate replacement income tax (personal property replacement tax)
IOWA
General income tax
KANSAS
Income tax
KENTUCKY
General income tax
LOUISIANA
General income tax
MAINE
Corporate income tax
Personal income tax
MARYLAND
Income tax
MASSACHUSETTS
Corporate excise (income) tax, where charged on net income
Personal income tax
MICHIGAN
Income tax
Single business tax
MINNESOTA
Income tax
MISSOURI
Income tax
MONTANA
Corporate income tax (licence)
Personal income tax
NEBRASKA
Personal income tax
NEW HAMPSHIRE
Business profits tax
NEW JERSEY
Corporation franchise tax except where it represents a minimum levy or is charged on amounts other than net income
Insurance companies tax on marine insurance companies
Personal income tax
NEW MEXICO
Income tax
NEW YORK CITY
Earnings tax on non-residents where it is charged on salaries
Financial corporation tax where it is charged on income
General corporate (income) tax, where charged on net income
Personal income tax on residents where it is charged on salaries
NEW YORK STATE
Personal income tax
Unincorporated business tax
* Corporation franchise tax where it is charged on the basis of net income. Where charged on a basis other than net income, credit is allowable up to the amount of tax that equates with the amount of tax that would have been payable if the net income basis had applied
NORTH CAROLINA
General income tax
Financial institutions excise tax, except where it represents a minimum levy
NORTH DAKOTA
General income tax
OHIO
Corporation franchise tax when charged on net income
Income tax (Canton, Cincinatti, Cleveland, Columbus and Toledo)
Net profits tax (Cleveland)
OKLAHOMA
General income tax
OREGON
Corporate (excise) income tax
Personal income tax
PENNSYLVANIA
Corporate net income tax except where it is charged on amounts other than net income
Personal income tax
Philadelphia net profits and wages tax
Philadelphia city tax
RHODE ISLAND
Business corporate tax where charged on net income
SOUTH CAROLINA
Income tax
TENNESSEE
Corporate excise (income) tax
UTAH
Corporation franchise tax when charged on net income
VERMONT
Corporate income tax
Personal income tax
VIRGINIA
Direct corporate income tax
Personal income tax
WISCONSIN
Corporate franchise tax
Income tax

U.S.S.R.
Income tax on foreign legal persons
Income tax on the population
WESTERN SAMOA
Income tax
YUGOSLAVIA
Tax on income of a basic organisation of associated labour
Tax on a worker's personal income
Tax on personal income derived from independent exercise of agricultural activity
Tax on personal income derived from independent exercise of economic activity
Tax on personal income derived from independent exercise of professional activity
Tax on personal income derived from copyrights, patents and technical innovations
Tax on revenue derived from capital and capital rights
Tax on total revenue of citizens
Tax on income of a foreign person engaged in economic and professional activities
Tax on compensation obtained by a foreign person from investments in a domestic organisation of associated labour
Tax on income of a foreign person carrying out investment projects
Tax on revenue of a foreign person carrying on passenger and cargo transport

COMMISSIONER OF TAXATION
10 November 1988

References

ATO references:
NO L 87/782-4

Date of effect:
Immediate

Subject References:
FOREIGN TAX CREDIT SYSTEM - CREDITABLE FOREIGN TAXES

Legislative References:
6AB(2)
6AB(6)
160AF