Taxation Ruling
IT 2507
Income tax : foreign tax credit system - foreign taxes eligible for credit against australian income tax
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Please note that the PDF version is the authorised version of this ruling.
FOI status:
May be releasedFOI number: I 1211455PREAMBLE
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:
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- the precise title of the tax;
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- the title of the law under which the tax is imposed;
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- whether the tax is levied by a national, state or local authority and the name of that authority; and
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- 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):
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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
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Federal:
- Income taxes imposed by the Government of Canada Provincial:
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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
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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