The ATO has welcomed the decision of the High Court to basically uphold the decision of the Full Federal Court in a case which the ATO won, in relation to foreign income tax offsets (‘FITO’).
An Australian tax resident had sold some US investments and paid US tax on the gains.
The taxpayer was then basically taxed on half of those gains in his assessable Australian income (i.e., the gains were eligible for the CGT discount in Australia).
The taxpayer included the whole of the US tax paid in his FITO to offset against his Australian income tax.
However, when determining the FITO available, the ATO only allowed the proportion of the US tax paid that related to the capital gain included in his Australian assessable income.
Continue Reading our March 2020 Newsletter