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Multiple foreign income |
See Also
Adjustment of profit | DTR Calculations | DTR relief calculations | Short term timing / temporary differences
Select from the following headings:
Background | Developing the schedule | Completing the Schedule | Standard Sub-Schedules | Carry Forward | Related Errors
In spite of its title, this schedule should not be used to analyse mutiple types of foreign income.
The purpose of this schedule is to analyse foreign royalties, and identify appropriate double tax relief and the maximum ACT set off. This information from the schedule links to DTR Calculations, where a comprehensive calculation of double tax for all foreign income is undertaken. Alternative schedules should be developed to analyse non-royalty foreign income.
The user should consider whether foreign income comprises amounts which fall within the loan relationship provisions, in whch case the user should instead use the Foreign income loan relationships schedule.
Loan relationships
Loan relationships are defined in s80 Finance Act 1996. Broadly, a ?loan
relationship? exists where a creditor or debtor for a ?money debt? arises from
a transaction for the lending of money. A ?money debt? is a debt to be settled
by payment of money, or the transfer of a right if the debt is not paid. Certain
types of creditor or debtor cannot be loan relationships.
This schedule is developed from the 'D' schedules using the Income sub-menu. It will then be stored within the 'A' pack of schedules.
The schedule is designed to allow analysis of royalties accrued and received where it is accounted for on an accruals basis.
The user should enter foreign income, together with reliefs such as for foreign withholding tax suffered and income tax suffered. In addition to inputtingthe debit/credit to the profit and loss account, the user should input the amount that is taxable in the period, otherwise the A schedule will not recognise any taxable income
Some of the other schedule features are described in more detail below:
Calculations
The software will automatically calculate the balance carried forward at the end of the period, the net amount received during the period, the UK tax attributable to this income and the allowable foreign tax credit.
Withholding tax
The software will automatically grant relief for this tax or the UK tax arising on the income (if lower) on a credit basis.
Interaction with deferred tax schedules
If deferred tax schedules have been included then the user must also enter the amounts of withholding tax estimated to become due on year end balances. These in turn will feed through to the Short term timing differences schedule.
Deduct foreign tax
A selector flag at the bottom of the schedule allows the user to select relief for foreign tax as a deduction instead of a credit.
Note: The Sheet properties and Row properties dialogs are enabled on this schedule and may be useful when entering data.
There are no standard sub-schedules.
On carry forward, this schedule is automatically developed in the subsequent computation if it is present in the prior year computation. In the subsequent computation, the balance brought forward is entered automatically.
Error | How to
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