Foreign Income Tax Offset and the Actuary Percentage

Scenario

Although foreign credits have been recorded in the fund, the Foreign Income Tax Offset (FITO) calculated by Simple Fund 360 is understated. The fund is a pension fund.

Details

BGL have clarified with the ATO, if the foreign income tax offset (FITO) should be claimed in the scenario where a fund has exempt income due to an actuary percentage.

The ATO have advised that the percentage should always be applied to the FITO. This is because the associated foreign income that lead to the offset is not fully assessable. Therefore the full amount of the FITO cannot be claimed.

The system will use the formula below to calculate the Foreign Income Tax Offset (FITO) applicable.

FITO applicable = Foreign income tax offset entered in transactions * (1 - Actuary Percentage). 

 

If you are claiming a foreign income tax offset of more than $1000, you have to work out your foreign income tax offset limit. For more information, click here. 

In this case, Simple Fund 360 adheres to the following formula: 

[Gross foreign income of section B label D1 x 0.15] x (1-tax free percentage)

Example

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The following example relates to a fund claiming a foreign income tax offset of up to $1000

• Actuary Percentage of 70% and

• Foreign Income Tax Credits of $100.

 

By applying the actuary percentage, $70 of the Foreign income tax credits can NOT be claimed (70% x $100 = $70)

 

Therefore the system will only identify $30 of the FITO as eligible to be claimed.