Section LJ 8 — Income Tax Act 2007: Repaid foreign tax: effect on FDP liability

LJ 8 Repaid foreign tax: effect on FDP liability Who this section applies to (1) This section applies to a person who receives a foreign dividend from a foreign dividend company, and the person or the company has— (a) paid an amount of foreign income tax, or in relation to whom an amount of foreign income tax has been paid or withheld; and (b) received a refund, amount, or benefit (the refund ) determined directly or indirectly by reference to some or all of the payment of foreign income tax. When refund received before calculation of FDP (2) If the person or company receives the refund before the person calculates the amount of FDP payable under section RG 4 (Calculating amount of FDP) for a tax year, the formula is modified as follows: (a) if the refund relates to foreign withholding tax on the dividend, the item foreign tax is the amount by which the foreign withholding tax paid is more than the amount of the refund: (b) if the refund relates to foreign income tax taken into account in the item total tax paid in section LL 2(5) (Tax credits for underlying foreign tax) or the item tax withheld in section LL 6(3) (Foreign dividend company lower tier UFTCs), the foreign dividend company's calculation of UFTC is modified as follows: (i) the item foreign tax paid is the amount by which the total income tax or foreign income tax paid by the foreign dividend company is more than the amount of the refund: (ii) the item tax withheld is the amount by which the tax withheld and paid in relation to the standard dividend is more than the amount of the refund. When subsection (4) applies (3) Subsection (4) applies if— (a) the person or company receives the refund after the person has calculated the amount of FDP payable for a tax year under section RG 4 ; and (b) the person has taken the amount of foreign income tax paid or withheld into account in that calculation in the items foreign tax or underlying credit in section RG 4(1) ; and (c) the person has not taken the refund into account in that calculation. When refund received after calculation of FDP (4) The person must recalculate the FDP liability for the tax year and pay the difference to the Commissioner as FDP. Date for payment (5) In subsection (4), the date for payment is 30 days after the later of— (a) the date on which the person or the company receives the refund: (b) the date for payment of FDP to the Commissioner in relation to the foreign dividend received for which the recalculation is required. Associated persons (6) For the purposes of this section, the refund is treated as received by the person or company, whether it is received by the person or company, a person who paid or withheld the foreign income tax, or a person associated with any of them. Defined in this Act: amount , associated person , Commissioner , FDP , foreign dividend, foreign dividend company foreign income tax , income tax , pay , tax year Compare: 2004 No 35 ss LC 1(3A), (3B) , LC 3 Section LJ 8: added (with effect on 1 April 2008), on 6 October 2009, by section 339(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section LJ 8(5): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 103(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).