Issue No. 48 - August/September 2009
Welcome change to tax on foreign income
Australians investing or doing business overseas who are making losses or paying tax in a foreign jurisdiction can benefit from changes to the foreign loss and foreign tax credit rules according to tax consultants, William Buck.
Businesses and individuals can take advantage of the new rules when they lodge a tax return for income years commencing on or after 1 July 2008.
David Martland, Tax Manager at William Buck, says the new rules streamline a complicated income class system. Now, foreign income tax offsets (previously foreign tax credits) and foreign losses (or foreign tax deductions) can be applied to any foreign income, making them much easier to use.
“Previously foreign tax credits were quarantined by class which meant in some circumstances these credits might never be used and would be lost after five years,” David says.
“Likewise, foreign losses were quarantined into four separate income classes. If you didn’t have income of the same class, t...