ATO Interpretative Decision
ATO ID 2002/507 (Withdrawn)
Assessability of interest received from Switzerland - foreign tax credits
FOI status: may be released
||This ATO ID is withdrawn. Guidance on the issue contained in this ATO ID can be found at Investment income (QC 31937).
||This document has changed over time. View its history.
Status of this decision: Decision withdrawn 23 February 2018.
|CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.|
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.
Is the interest income received by a resident taxpayer from sources in Switzerland assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Yes. The interest income received by a resident taxpayer from sources in Switzerland is assessable under subsection 6-5(2) of the ITAA 1997.
The taxpayer is an Australian resident for tax purposes.
The taxpayer received interest income from a source in Switzerland.
Reasons for Decision
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
As the taxpayer is a resident of Australia the interest income forms part of their assessable income under subsection 6-5(2) of the ITAA 1997.
In determining liability to Australian tax on foreign sourced income it is necessary to consider not only the income tax laws but also any applicable double tax agreement contained in the International Tax Agreements Act 1953 (the Agreements Act).
Section 4 of the Agreements Act incorporates that Act with the Income Tax Assessment Act 1936 (ITAA 1936) and ITAA 1997 so that those Acts are read as one. The Agreements Act effectively overrides the ITAA 1936 and ITAA 1997 where there are inconsistent provisions (except for some limited provisions).
Schedule 15 to the Agreements Act contains the double tax agreement between Australia and Switzerland (the Swiss Agreement). The Swiss Agreement operates to avoid the double taxation of income received by Australian and Swiss residents.
Paragraph (1) of Article 11 of the Swiss Agreement provides that if interest from sources in Switzerland is received by an Australian resident then it may be taxed in Australia.
Under paragraph (2) of Article 11 of the Swiss Agreement interest from sources in Switzerland may also be taxed in Switzerland but the rate of tax is limited to 10 per cent of the gross amount.
Paragraph (1) of Article 22 of the Swiss Agreement provides that, subject to the provisions of the law of Australia, a credit for any tax paid in Switzerland will be allowed against Australian tax payable on income from sources in Switzerland.
The Swiss interest income received by the taxpayer forms part of their assessable income under subsection 6-5(2) of the ITAA 1997. If Swiss tax is paid in relation to this interest, a foreign tax credit will be allowed. If the Swiss tax is less than the Australian tax that will be payable then the taxpayer will be entitled to a full credit for the Swiss tax paid.
Date of decision: 5 March 2002
|Year of income:||Year ended 30 June 2001|
Income Tax Assessment Act 1997
International Tax Agreements Act 1953
Schedule 15, Article 11(1)
Schedule 15, Article 11(2)
Schedule 15, Article 22(1)
Double tax agreements
Foreign tax credits
Business line: Small Business/Individual Taxpayers
Date of publication: 2 May 2002
|ATO ID 2002/507 (Withdrawn) history