US Foreign Tax Credit case appealed to High Court

Updated: Jan 20

The taxpayers in Burton v FC of T 2019 ATC ¶20-709, [2019] FCAFC 14 have applied to the High Court for special leave to appeal from the decision of the Full Federal Court. CCH has reported that the special leave application is scheduled to be heard on Friday, 14 February 2020.

In that case, the Full Federal Court confirmed (in a 2-1 decision) that there was no double taxation where an Australian tax resident made gains from investments in the United States. The Commissioner denied the taxpayer a full foreign income tax offset against his tax liability in Australia on the gains on the basis that the Australian 50% CGT discount meant that the full US gain was not included Australian assessable income and consequently that they could not claim the whole amount of US tax paid as a FITO in his Australian tax return.

This case is a major issue for all accountants who have clients with CGT assets located in the United States and we will be providing a detailed analysis of this case and developments to members of Expand.