Taxation (International and Other Provisions) Act 2010 section 100

First limitation for purposes of section 99(2)

Section 100 sets out the first of two limitations that reduce the amount of foreign income eligible for double taxation credit relief, by requiring that a proportionate share of business expenses be deducted from that income before calculating the credit.

• The relevant foreign income must be reduced (but not below nil) by the expenses attributable to it before calculating the foreign tax credit.
• The attributable expenses are found by applying a fraction (the relevant income divided by total income for that business category) to the total relevant expenses for the period of account.
• If total income for the business category is nil, the denominator of the fraction is instead the total of all income and gains for that period that qualify for foreign tax credit relief and are referable to that business category.
• The relevant income figure used in the fraction is the amount before any reduction under the expense allocation rules, ensuring the calculation is based on the gross foreign income.