Foreign income tax offset rules

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Are you an Australian resident earning foreign income?

The Tax Office has provided a guide on claiming foreign income tax offsets.

You should ensure that you declare income from all sources within and outside of Australia.


  1. The Tax Office provides foreign tax offsets for individuals who earn income overseas.
  2. To be entitled to a foreign tax offset:
    • An individual must have paid, or be deemed to have paid an amount of foreign tax; and
    • The income or gain must be included in their assessable income for Australian tax purposes.
  3. The foreign tax offset can still be claimed in the current year should an individual pay foreign income tax after the year end by requesting an amended assessment for that year.
  4. Individuals have up to four years from the date of payment of foreign tax to request for an amended assessment.
  5. If the foreign tax offset claimed is less than $1,000, only the actual amount of foreign income tax paid needs to be included in the taxation return.
  6. However if the foreign tax offset claim exceeds $1,000, the individual foreign income tax offset limit will need to be calculated.
  7. Before calculating an individual’s net income, all foreign income deductions and tax paid must be converted to Australian dollars.
  8. More information can be found here.

Remember: Australian residents for tax purposes need to declare all income sources within and outside Australia to the Tax Office.


This article was originally published on 24/04/2014 and is current as at that date

Disclaimer: This article contains general information. Before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.


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