Income Tax (Trading and Other Income) Act 2005 section 845D

Effect of claim, foreign employment election or foreign gain claim: costs of dwelling-related loan

Section 845D removes the tax reduction for non-deductible dwelling-related loan costs on an overseas property business where an individual claims the remittance basis for foreign income, foreign employment income or foreign gains in the same tax year.

• This section applies to individuals who have a relievable amount under section 274A for dwelling-related loan costs in respect of an overseas property business and who also claim the remittance basis for the same tax year.
• Where the individual makes a foreign income claim, a foreign employment election or a foreign gain claim for the tax year, they lose their entitlement to the section 274A tax reduction for that year's relievable amount.
• In addition, any brought-forward amount that would otherwise carry into the following tax year in respect of that overseas property business is set to nil, preventing unused relief from being carried forward.
• The effect is that choosing the remittance basis completely extinguishes both the current year's dwelling-related loan cost relief and any amount that could otherwise be used in future years.