Calculating the offset



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You claim the foreign income tax offset in your income tax return.

If claiming an offset of $1,000 or less, you only need to record the actual amount of foreign income tax paid on your assessable income (up to $1,000).

If claiming a foreign income tax offset of more than $1,000, you will first need to work out your foreign income tax offset limit.


Before you calculate your net income, you must convert all foreign income deductions and foreign tax paid to Australian dollars - refer to Converting foreign income to Australian dollars.

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Unlike the previous system of foreign tax credits (applying up to 30 June 2008), you no longer have to quarantine your foreign income into separate classes to work out the amount of the offset. All types of income are treated the same for the purposes of working out the foreign income tax offset.

Further Information

For a comparison of the foreign income tax offset rules and the foreign tax credit rules, refer to Changes to foreign loss quarantining and foreign tax credit calculation rules - overview.  

End of further information
Last modified: 29 Jun 2010QC 27994