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IS 21/09
Issued
22 Dec 2021

Income tax – foreign tax credits – how to calculate a foreign tax credit

This interpretation statement explains how to calculate a foreign tax credit under subpart LJ of the Income Tax Act 2007.  It also explains how to segment foreign-sourced income by country and by type.  Examples are included to illustrate the concepts discussed.

Income Tax Act 2007: ss BC 4, BC 6, BD 1, CQ 4, CQ 6, CQ 6, CV 13, CW 9, CX 57B, DA 1, DC 8, EX 28, EX 29, EX 30, EX 31, EX 32, EX 33, EX 34, EX 35, EX 36, EX 37, EX 38, EX 39, EX 40, EX 41, EX 42, EX43, EX 44, EX 50, EX 51, EX 59, GB 27, GB 28, GB 29, IA 3(4), LA 5, YA 1, YA 2(5), YD 4 and subparts LJ and LK
Tax Administration Act 1994: ss 78B, 108 and 113
Double Taxation Relief (Australia) Order 2010
Double Tax Agreements (Canada) Order 2015
Double Taxation Relief (United Kingdom) Order 1984
Double Taxation Relief (United States of America) Order 1983

Buckley & Young Ltd v CIR (1978) 3 NZTC 61,271 (CA)
Alcan New Zealand Ltd v CIR (1994) 16 NZTC 11,175 (CA)
Charity Finance Ltd v CIR (1998) 18 NZTC 13,565 (HC)
CIR v Banks (1978) 3 NZTC 61,236 (CA)
CIR v N V Philips Gloeilampenfabrieken [1955] NZLR 868 (CA)
Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR 767
Esquire Nominees Limited v FCT 73 ATC 4,114 (HCA)
FCT v French (1957) 98 CLR 398 (HCA)
Mangin v CIR [1971] NZLR 591 (PC)
Nathan v FCT (1918) 25 CLR 183 (HCA)
New Zealand Co-Operative Dairy Co Ltd v CIR (1988) 10 NZTC 5,215 (HC)
Parke Davis & Co v FCT (1959) 101 CLR 521 (HCA)
Sleeman v CIR [1965] NZLR 647 (SC)