What is a Foreign Tax Credit
Some countries, including the United States, the U.K. and Australia, have foreign tax treaties in place. These treaties usually offer foreign tax credits when you are able to prove that you’ve paid tax elsewhere. These credits help to prevent double taxation, and they may apply to income taxes (including pension payments), inheritance taxes, gift tax and/or and some interest payments. Speak to a qualified tax professional about your unique situation.
In order to be eligible for a foreign tax credit or offset:
You must have a tax imposed on you.
You must have paid that tax in a foreign country.
The tax must be a legal and actual liability.
- The tax is on income, in lieu of income tax, or must otherwise be included in assessable income.