Foreign Tax Credits (FTC) are meant to prevent double taxation — but in practice, they often introduce complexity, manual tracking, and room for error.
Between foreign income schedules, unremitted income tracking, pooling rules, and currency conversions, it’s easy for tax teams to lose time piecing everything together.
In this guide, we walk through how Tax Savy simplifies the entire Foreign Tax Credit workflow, from recording foreign income to calculating the final FTC claim — all in a structured, automated way.
Step 1: Identify and Tag Foreign-Sourced Income
Foreign Tax Credits start with identifying the correct income source.
In Tax Savy, foreign income is captured through foreign-sourced income schedules, which include:
- Rental Income Schedule
- Other Income Schedule (e.g. dividends, interest, royalties)
- Foreign Trade / Branch Schedule
Once the schedule is tagged:
- Foreign tax suffered is recorded directly in the schedule.
- The tax treatment is determined via the Tax Adjustment field.
If the income is remitted in the current YA, it is added back into the main computation and can be tagged directly to the FTC workflow.
If the income is unremitted or partially remitted, it flows automatically into the Unremitted Foreign Income Tracking Schedule.
Step 2: Track and Manage Unremitted Foreign Income
The Unremitted Foreign Income Tracking Schedule consolidates:
- Current-year unremitted income, and
- Prior-year unremitted income (added manually or via upload).
Income is grouped by:
- Income type
- Year of Assessment
- Country
When income is remitted (partially or fully), Tax Savy:
- Automatically allocates related expenses and foreign tax, and
- Adds the net remitted income back into the main computation.
With a single click, remitted income can then be linked to the FTC Schedule, ensuring the correct amounts are carried forward for the claim.
Step 3: Compute the Foreign Tax Credit
Once foreign income — whether current-year or remitted prior-year — is linked, the Foreign Tax Credit Schedule is created.
The schedule is automatically pre-populated, and users only need to:
- Define income type and country (for current-year income), and
- Input key tax computation figures such as statutory income and tax payable.
Tax Savy then calculates the FTC available automatically.
Pooling, Country-by-Country, or Hybrid?
Tax Savy allows easy comparison between:
- FTC pooling, and
- Country-by-country, source-by-source claims.
Where certain income streams do not qualify for pooling, Tax Savy supports a hybrid method, applying pooling where possible and country-by-country where required — all within the same schedule.
Foreign Currency Handling
For tax computations not prepared in SGD:
- Foreign tax suffered is converted using the average exchange rate, and
- Compared against Singapore tax automatically.
No separate worksheets or manual conversions required.
Conclusion
With Tax Savy, Foreign Tax Credits are no longer a manual, spreadsheet-driven exercise.
From income identification to unremitted tracking and final FTC computation, everything flows seamlessly — reducing risk, saving time, and giving tax teams full confidence in their claims.
🎥 Watch our 2-part tutorial series to see how it works:
- Part 1: Foreign income & unremitted tracking
- Part 2: FTC Schedule & computation