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OE 19: BETA person’s payment of income tax on foreign income
or “How BETA individuals can claim tax credits for overseas income”
You could also call this:

“Using branch equivalent tax credits to pay income tax on foreign dividends”

You can use some or all of the credit balance in your branch equivalent tax account to pay your income tax for a year. This is called a branch equivalent tax debit. You can do this if you get a dividend from a controlled foreign company that year, you have a credit balance in your account, and you’ve already paid the income tax that led to the credit.

To use this option, you need to record the amount as a debit in your branch equivalent tax account. This will count as paying your income tax, but only up to the amount of tax you owe on the dividend you got. The day you choose to do this is when the debit happens.

When you use your credit balance this way, it’s listed in a special table called “person’s branch equivalent tax debits” under “payment of income tax”.

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Next up: OE 21: BETA person’s refund of income tax

or “Refund of income tax for people with overseas income can result in a tax debit”
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Part O Memorandum accounts
Branch equivalent tax accounts (BETA): Branch equivalent tax debits

OE 20BETA person’s payment of income tax

  1. On meeting the requirements of subsection (4), a BETA person may choose to use some or all of a credit balance in their branch equivalent tax account to satisfy an income tax liability of the person for an income year.

  2. The amount used to satisfy the income tax liability is a branch equivalent tax debit in the person’s branch equivalent tax account.

  3. The branch equivalent tax debit in subsection (2) is referred to in table O10: person’s branch equivalent tax debits, row 2 (payment of income tax).

  4. The person may make an election under subsection (1) if—

  5. they derive a dividend from an income interest in a CFC during the income year; and
    1. a credit balance exists in their branch equivalent tax account; and
      1. they have paid the income tax giving rise to a credit included in the credit balance.

        1. The person makes the election by recording the amount as a debit in the branch equivalent tax account.

        2. Once the election is made, the income tax liability is satisfied to the extent to which the liability is no more than the income tax payable on the amount of the dividend derived.

        3. The debit date is the day of election.

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