Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) An amount of income or profits is subject to foreign income tax in a foreign country in a * foreign tax period if * foreign income tax (except a tax covered by subsection (7)) is payable under a law of the foreign country in respect of the amount because the amount is included in the tax base of that law for the foreign tax period.
Note: Subdivision 832 - C (Hybrid financial instrument mismatch) has effect as if certain amounts that are subject to a concessional rate of foreign income tax were not subject to foreign income tax: see section 832 - 235.
(2) To avoid doubt, an amount of income or profits may be subject to foreign income tax in a foreign country in a * foreign tax period even if the relevant entity's tax base is nil, or a negative amount.
Effect of credits etc. for underlying taxes
(3) Despite subsection (1), if:
(a) an amount (the pre - credit amount ) of income or profits would, apart from this subsection, be * subject to foreign income tax in a foreign country; and
(b) an entity is entitled under the law of the foreign country to a credit, rebate or other tax concession in respect of the amount for foreign tax (other than a withholding - type tax) payable under a tax law of a different country (including Australia);
then only so much of the pre - credit amount as reasonably represents an amount not effectively sheltered from * foreign income tax (except a tax covered by subsection (7)) by the credit, rebate or tax concession is subject to foreign income tax .
Note: This subsection is disregarded in working out whether an amount of income or profits is dual inclusion income: see subsection 832 - 680(3).
Effect of "dividend received deductions" in foreign countries
(4) Despite subsection (1), if:
(a) an amount (the pre - deduction amount ) of income or profits would, apart from this subsection, be * subject to foreign income tax in a foreign country; and
(b) the amount consists of a dividend received by an entity from a company; and
(c) the entity is entitled to a * foreign income tax deduction in respect of all or part of the amount of the dividend;
then only so much of the pre - deduction amount as reasonably represents an amount not effectively sheltered from * foreign income tax (except a tax covered by subsection (7)) by the foreign income tax deduction is subject to foreign income tax .
(5) An amount of income or profits of an entity is subject to foreign income tax if the amount is included in working out the tax base of another entity under a provision of a law of a foreign country that corresponds to section 456 or 457 of the Income Tax Assessment Act 1936 (including a tax base that is nil, or a negative amount) .
Effect of foreign hybrid mismatch rules
(6) In determining for the purposes of this section whether a payment is included in a tax base of a law of a foreign country as mentioned in subsection (1), disregard the effect of the following:
(a) any provisions of * foreign hybrid mismatch rules of a foreign country;
(b) any provisions of another law of a foreign country relating to * foreign income tax (except a tax covered by subsection (7)) that has substantially the same effect as foreign hybrid mismatch rules.
Certain foreign taxes disregarded in this Division
(7) This subsection covers each of the following:
(b) * unitary tax;
(e) in the case of a federal foreign country--a State tax.
Note: The definitions of credit absorption tax and unitary tax are in
section 770 - 15.