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Taxation Ruling

IT 2507


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

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

FOI status: May be released

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

 


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