Private ruling: Foreign income tax offset
Published: June 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer | Are you entitled to a tax offset for contributions made to the Country X Insurance Scheme? | No.

Relevant facts and circumstances: You are an Australian resident for tax purposes. You are currently working in Country X. Your employer deducts tax and an amount for Country X Insurance Scheme contributions from your wages. The Insurance contributions are levied by Country X government on wages and goes towards providing a pension upon retirement. You believe that the amounts withheld as Country X Insurance Scheme contributions are a tax levied upon you as a consequence of your employment and earning of assessable income.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1. | Income Tax Assessment Act 1997 Division 770.

Reasons for decision: Summary: According to Division 770 of the ITAA 1997, to count towards a foreign income tax offset, foreign income tax must be imposed under a law other than an Australian law and be: · a tax on income · a tax on profits or gains, whether of an income or capital nature, or · any other tax that is subject to an agreement covered by the International Tax Agreements Act 1953 . The payments taken directly from your Country X salary as a contribution to the Country X Insurance Scheme are not a tax on income, or a tax on profits or gains, or a tax that is subject to an agreement covered by the International Tax Agreements Act 1953 . Therefore, you are not entitled to a tax offset for the amounts taken directly from your Country X salary as contributions to the Country X Insurance Scheme.

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