Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Tax credits and other credits - Tax credits for foreign income tax

LJ 3: Meaning of foreign income tax

You could also call this:

"What foreign income tax means"

Illustration for Income Tax Act 2007

When you hear the term foreign income tax, it means a tax from another country. You need to know it can be a tax that meets certain requirements, such as those outlined in section YA 2(5). It can also be a tax that is part of a double tax agreement, which helps prevent you from being taxed twice. You should be aware that foreign income tax includes some specific types of taxes from other countries. These taxes are called qualified domestic minimum top-up taxes, as defined in Article 10.1.1 of the global anti-base erosion model rules. It also includes taxes that are similar to the taxes imposed by the Income Tax Act. However, foreign income tax does not include certain taxes based on specific model rules. These rules are outlined in Articles 2.1 to 2.3 and 2.4 to 2.6 of the global anti-base erosion model rules. You can find more information about these rules and how they apply in the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518104.

This page was last updated on — View changes

Topics:
Money and consumer rights > Taxes
Previous

LJ 2: Tax credits for foreign income tax, or

"How to claim tax credits for overseas income tax paid"

Next

LJ 4: Meaning of segment of foreign-sourced income, or

"What counts as income from overseas for tax purposes"

Part LTax credits and other credits
Tax credits for foreign income tax

LJ 3Meaning of foreign income tax

  1. For the purposes of this Part, foreign income tax—

  2. means—
    1. an amount of a tax of another country meeting the requirements of section YA 2(5) (Meaning of income tax varied):
      1. in relation to a double tax agreement providing relief from tax or double taxation, an amount of tax to which the double tax agreement applies; and
      2. includes an amount of a tax of another country that is a qualified domestic minimum top-up tax, as defined in Article 10.1.1 of the global anti-base erosion model rules; and
        1. includes an amount of a tax of another country that is of substantially the same nature as the tax that will be imposed by this Act—
          1. when all the provisions of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (the amendment Act) listed in section 2(31) and (33) of the amendment Act have come into force; and
            1. because of the application of the modifications to Article 2.1 of the global anti-base erosion model rules made by section 123(3) of the amendment Act; and
            2. does not include an amount of a tax of another country that is based on—
              1. Articles 2.1 to 2.3 of the global anti-base erosion model rules; or
                1. Articles 2.4 to 2.6 of those model rules.

                Notes
                • Section LJ 3: replaced (with effect on 1 January 2024), on , by section 105(1) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).