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Part B - Foreign tax credit information
Last updated 8 December 2005
This part contains information relevant to determining an Australian resident unit holder's entitlement to foreign tax credits under Division 18, Part III of the ITAA 1936.
The unitholder needs to determine the foreign tax credit entitlement 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) on the unit holder's return.
Foreign income categories Part B assumes that 'passive income' and 'other income' are the relevant foreign income categories for foreign tax credit purposes under subsection 160AF(7) of the ITAA 1936 for managed funds. If this is not the case, additional information will need to be provided.
Passive income is defined in section 160AEA of the ITAA 1936.
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:
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.
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 unitholder 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 unitholder would have no foreign tax credit entitlement in relation to their share of the foreign tax paid by the trustee.
