Income Tax Act 2007 section 943B

The "foreign element" of a deemed deduction or deemed income

Section 943B defines how to calculate the foreign element of deemed income or a deemed deduction, which represents the proportion attributable to foreign tax relief.

• The foreign element is a proportion of the deemed income or deemed deduction, determined by the ratio of amount A to amount B.
• Amount A is the lower of two figures: the reduction in the income pool (from section 943A(1)) multiplied by the basic rate of tax, or the double tax relief pool at the start of the tax year.
• Amount B is the total deemed deduction — that is, the tax treated as deducted from the deemed income — attributable to that tax year.
• The ratio of A to B determines what fraction of the deemed income or deemed deduction is treated as having a foreign element.