1 Resident vs Non-resident
- Lodge TR as non-resident : you only need to declare income earned IN Australia, but the tax will be higher.
- Lodge TR as resident = lower tax rate + can claim tax offset but need to declare all income IN and OUT of Australia
- Gross income from PAYG (for US: Earnings Statement, for Canada: Statement for remuneration paid) include this in item 1, 3 or 24 of ITR.
- 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
- Australian foreign income tax offset provides relief from double taxation
- Must have paid the tax. Foreign income tax can be paid by deduction or withholding.
- If client did TR in overseas countries, any tax refund cannot be claimed as offset. (QC 51238)
- Tax offset limit = tax paid overseas
- Tax offset is at O item 20 of TR
5. Record keeping: evidence for paying tax in foreign countries
- a statement from the foreign tax authority (similar to NOA)
- a distribution statement from trust
- payslips, payment summaries when no requirement from foreign country to lodge TR
- foreign income tax return
- Confirm letter that all taxes have been paid
- You must convert all foreign income, deductions and foreign tax paid into Australian dollars for tax purposes.
- Average exchange rate can be found at https://www.ato.gov.au/Rates/Foreign-exchange-rates/.
7. Additional info on US tax law:
- US resident and resident alien must file federal income TR if gross income >= $10,400 (single, age < 65)
- Fail to file TR may result in penalty