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Part B Foreign tax credit information

Last updated 19 February 2020

  1. This part contains information relevant to determining the Australian resident unit-holder's entitlement to foreign tax credits under Division 18, Part III of the ITAA 1936.
  2. The foreign tax credit entitlement needs to be determined by the unit-holder separately for each class of foreign income. The foreign tax credit for each class cannot be more than the Australian tax applicable to that class of taxable foreign income. Due to these requirements, part A cannot simply identify the unit-holder's share of foreign tax paid by the trustee as the amount to claim at label 19O (Foreign tax credits) in the unit-holder's return.

    Full details are set out in the Tax Office publication How to claim a foreign tax credit.
  3. Foreign income categories.

    Part B assumes that 'passive income' and 'other income' are the relevant foreign income categories for FTC purposes under subsection 160AF(7) of the ITAA 1936 for managed funds. If this is not the case then additional information will need to be provided.
  4. Passive income is defined in section 160AEA of the ITAA 1936.
  5. Foreign capital gains

    Fund managers should show foreign capital gains and attached foreign tax paid in part B only if the capital gain is deemed to be foreign source income under subsection 160AE(2) of the ITAA 1936.

    Therefore, do not show a foreign capital gain in part B if:
  6.    
    • no foreign tax was paid in relation to that capital gain, or
    • the foreign capital gain is not included in the net income of the trust estate.
     
  7. The break-up of the foreign net capital gains that are included in passive income is necessary for determining the unit-holder's foreign tax credit entitlement as per subsection 160AE(2) and section 160AF of the ITAA 1936. For example, the unit-holder may have offset losses against gross capital gains such that no foreign capital gain is ultimately included in their assessable income as per subsection 160AE(2). In these circumstances, the unit-holder would have no foreign tax credit entitlement in relation to their share of the foreign tax paid by the trustee.

QC17181