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21 Nov 07 Factsheet: Foreign loss quarantining and foreign tax credit calculation rules changes

The ATO has published a factsheet providing details of the changes made to the foreign loss quarantining and foreign tax credit calculation rules by Tax Laws Amendment (2007 Measures No 4) Act 2007 which received Royal Assent on 24 September 2007.

The Act:

  • repeals the former foreign loss and foreign tax credit quarantining rules and replaces them with new foreign income tax offset rules;
  • provides transitional rules for the treatment of existing foreign losses and credits;
  • provides a mechanism to allow the Commissioner of Taxation to give effect to Australia’s tax treaty obligations to provide relief from economic double taxation arising from transfer pricing adjustments; and
  • allows certain taxpayers operating within the FIF rules the option of calculating attributable income using the CFC rules.

The changes providing for the Commissioner’s discretion to relieve double taxation resulting from a transfer pricing adjustment apply in relation to income years ending before and after Royal Assent. The remaining amendments apply in relation to income years, statutory accounting periods and notional accounting periods starting on or after the 1 July following the day of Royal Assent.

For a copy of the factsheet, go here

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