1 Resident vs Non-resident

  1.  Lodge TR as non-resident : you only need to declare income earned IN Australia, but the tax will be higher.
  2.  Lodge TR as resident = lower tax rate + can claim tax offset but need to declare all income IN and OUT of Australia

2. Income:

  1. Gross income from PAYG (for US: Earnings Statement, for Canada: Statement for remuneration paid) include this in item 1, 3 or 24 of ITR.

3. Deduction:

  1. Deductions in Aus and overseas claim in D1-D5

    Take expenses from 3 - income from 2 and write in U item 20, if negative print L in the Loss box at the right of U item 20

4. Tax offset

  1. Australian foreign income tax offset provides relief from double taxation
  2. Must have paid the tax. Foreign income tax can be paid by deduction or withholding.
  3. If client did TR in overseas countries, any tax refund cannot be claimed as offset. (QC 51238)
  4. Tax offset limit = tax paid overseas
  5. Tax offset is at O item 20 of TR

5. Record keeping: evidence for paying tax in foreign countries

  1. a statement from the foreign tax authority (similar to NOA)
  2. a distribution statement from trust
  3. payslips, payment summaries when no requirement from foreign country to lodge TR
  4. foreign income tax return
  5. Confirm letter that all taxes have been paid
    (QC 51238)

6. Conversion

  1. You must convert all foreign income, deductions and foreign tax paid into Australian dollars for tax purposes.
  2. Average exchange rate can be found at https://www.ato.gov.au/Rates/Foreign-exchange-rates/.

7. Additional info on US tax law:

  1. US resident and resident alien must file federal income TR if gross income >= $10,400 (single, age < 65)
  2. Fail to file TR may result in penalty
    details: https://www.irs.gov/pub/irs-pdf/p501.pdf