Document ID: chunk:federal_register_of_legislation:C2010C00184:clause:1_1:p4
Version: federal_register_of_legislation:C2010C00184
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 4/8)
Character Range: 14697–17261

The amount of your *tax offset for the year is the sum of the *foreign income tax you paid that counts towards the offset for the year.

Note 1: The amount of foreign income tax you paid may be affected by Subdivision 770‑C.

Note 2: The amount of the offset might be increased under section 770‑230 of the Income Tax (Transitional Provisions) Act 1997, if you have pre‑commencement excess foreign income tax.

770‑75  Foreign income tax offset limit

 (1) There is a limit (the offset limit) on the amount of your *tax offset for a year. If your tax offset exceeds the offset limit, reduce the offset by the amount of the excess.

 (2) Your offset limit is the greater of:
 (a) $1,000; and
 (b) this amount:
 (i) the amount of income tax payable by you for the income year; less
 (ii) the amount of income tax that would be payable by you for the income year if the assumptions in subsection (4) were made.

Note 1: If you do not intend to claim a foreign income tax offset of more than $1,000 for the year, you do not need to work out the amount under paragraph (b).

Note 2: The amount of the offset limit might be increased under section 770‑80.

 (3) For the purposes of paragraph (2)(b), work out the amount of income tax payable by you, or that would be payable by you, disregarding any *tax offsets.

 (4) Assume that:
 (a) your assessable income did not include:
 (i) so much of any amount included in your assessable income as represents an amount in respect of which you paid *foreign income tax that counts towards the *tax offset for the year; and
 (ii) any other amounts of *ordinary income or *statutory income from a source other than an *Australian source; and
 (b) you were not entitled to any deductions that:
 (i) are *debt deductions that are attributable to an *overseas permanent establishment of yours; or
 (ii) are other deductions that are reasonably related to income covered by paragraph (a) for that year.

Note: You must also assume you were not entitled to any deductions for certain converted foreign losses: see section 770‑35 of the Income Tax (Transitional Provisions) Act 1997.

Example: If an entity has paid foreign income tax on a capital gain that comprises part of its net capital gain, only that capital gain on which foreign income tax has been paid is disregarded.

770‑80  Increase in offset limit for tax paid on amounts to which section 23AI or 23AK of the Income Tax Assessment Act 1936 apply

  Your offset limit under subsection 770‑75(2) is increased by any amounts of *foreign income tax that count towards the