Can the foreign income tax offset be claimed where there is an overall foreign loss?

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rja2023

(Newbie)Newbie

30 May 2023

A resident taxpayer has the following foreign income and losses: (figures used for illustrative purposes only)

Foreign trust distribution $30k

Foreign rental loss (50k)

Foreign tax paid on the trust distribution is $9k.

Can any foreign income tax offset be claimed in this scenario? In following the FITO limit calculation on the ATO website, it returns a negative offset figure because the Australian tax outcome when excluding all foreign income and losses is higher. (due to foreign rental loss) However by the very definition of claiming a FITO, the foreign tax has been paid and the trust distribution is included in the assessable income.

Should the foreign rental loss be excluded when calculating the FITO limit?

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