• Part 1 - Resident of Australia

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Use this part if you were an Australian resident for tax purposes during 2005-06.

    What you need

    • All your payment summaries for the 2005-06 income year
    • Details of your JPDA income and any foreign tax paid - from your employer, your pay slips or foreign tax assessments
    • TaxPack 2006 and TaxPack 2006 supplement if you are completing a paper tax return. See More information to find out how to get copies of these publications.

    You need to know

    You are taxed on your net assessable JPDA income at resident rates of tax with a foreign tax credit allowed for the lesser of:

    • the Australian tax payable on your net assessable JPDA income, and
    • the tax paid to Timor-Leste.

    What you need to do

    You will need to use worksheets 1 and 2 to complete the following items on your tax return:

    • item 1 - income
    • items D1 to D5 - work-related expenses
    • item 19 - foreign source income.

    Follow these steps to complete your tax return.

    Step 1

    Complete worksheet 1 below for each payment summary that includes JPDA income. Worksheet 1 shows you how to deal with your JPDA income and deductions.

    Step 2

    Complete all parts of your tax return except:

    • O item 19
    • Total supplement tax offsets
    • item T
    • Total tax offsets
     

    Step 3

    Complete worksheet 2. Worksheet 2 shows you how to work out your foreign tax credit in respect of your net assessable JPDA income. In the course of completing worksheet 2, you will complete O item 19 on your tax return (supplementary section). If you are using e-tax, read the note Are you using e-tax? before using worksheet 2.

    Step 4

    Complete the remainder of your tax return.

    Worksheet 1: Net JPDA income subject to tax in Australia and Timor-Leste

    Complete this worksheet for each payment summary showing JPDA income.

     

    Jose*

    You

    Total gross income shown on your payment summary

    (a)

    $120,000

    (a)

    $

    Total gross JPDA income included on your payment summary

    (b)

    $96,000

    (b)

    $

    Subtract (b) from (a).

    (c)

    $24,000

    (c)

    $

    Divide (b) by 10.

    (d)

    $9,600

    (d)

    $

    Add (c) and (d). Write the amount at (e) at item 1 on your tax return.

    (e)

    $33,600

    (e)

    $

    Subtract (d) from (b). Include the amount at (f) at:

    • E item 19 on page 10 of your tax return (supplementary section)
    • the 'Foreign employment income' column (screen 2308), item 19 of e-tax
     

    (f)

    $86,400

    (f)

    $

    Total work-related expenses directly related to your JPDA income.**

    (g)

    $500

    (g)

    $

    Divide (g) by 10. The amount at (h) is the amount of work-related expenses relating to your JPDA income. Show these expenses at D1 to D5 on your tax return or in e-tax.

    (h)

    $50

    (h)

    $

    Subtract (h) from (g). The amount at (i) is the total of your work-related expenses relating to your JPDA income (for the next step). If using e-tax, show the amount at (i) in the 'Deductible expenses' column (screen 2308), item 19 of e-tax.

    (i)

    $450

    (i)

    $

    Subtract (i) from (f). Include the amount at (j) at L item 19 (e-tax will do this automatically).

    (j)

    $85,950

    (j)

    $

    Subtract (g) from (b). The amount at (k) is your net assessable JPDA income.

    (k)

    $95,500

    (k)

    $

    * See the example below.

    ** Work-related expenses are explained at questions D1 to D5 in TaxPack and e-tax. If you have more than one payment summary with JPDA income, claim all your JDPA work-related expenses against the payment summary with the highest JPDA income.

    Example

    Jose, a driller, lived in Darwin (zone A) when he was not at a drilling site. For part of the year he worked in the JPDA. Jose received a payment summary which showed $120,000 gross salary and wages and tax withheld of $24,528. He received a separate letter advising that the $120,000 included $96,000 relating to his period in the JPDA and that in addition to the $24,528 Australian tax withheld, $18,835 tax had been withheld and paid to Timor-Leste. Jose had work-related expenses of $700 of which $500 related to his work while in the JPDA. Jose contributed $500 to the Red Cross Hurricane Katrina appeal. He has no other income or deductions. Jose has no dependants. He has hospital cover

    Refer to worksheets 1 and 2 to see how Jose would fill them in.

    Jose will receive a refund of $2,533, that is, $41,168 (tax payable) - $18,835 (foreign tax credit) - $338 (zone tax offset) - $24,528 (tax withheld).

    If Jose had worked in Australia for the full year and had the same income and deductions, he would have completed the tax return differently and had a different tax withheld amount, but his refund would have been exactly the same.

    Are you using e-tax?

    If you are using e-tax, you will only need to complete box (o) on worksheet 2; e-tax will do the remainder of the calculations for you.

    If you need to go past (o) you will need to complete the worksheet in full because you will have carry-forward foreign tax credits. You will have a carry-forward foreign tax credit if your 2006 foreign tax credit is less than the amount at (o). Your foreign tax credit is shown on the Tax offsets available screen (screen 8102). You navigate to this screen from the Tax estimate screen (8101), available on the navigator bar.

    When completing item 19 (screen 2308), show the amount you have at (o) on the worksheet in the 'Foreign tax withheld' column.

    If you want to work out the amount of your foreign tax credit for yourself, complete the worksheet in full.

    Completing the worksheet in full

    To complete worksheet 2 in full you will need the amounts for your tax and Medicare items. These are available from your 'Tax estimate' screen (8101). Make sure you have completed all your income, deductions and Medicare items first.

    Did you have exempt foreign employment income?

    If you have included exempt foreign employment income at N item 19 on your tax return (supplementary section) you will not be able to calculate your foreign tax credit using worksheet 2. We will do it for you when you lodge your tax return (using TaxPack, e-tax or a tax agent).

    On a separate sheet of paper, print:

    Schedule of additional information - item 19 - exempt foreign income, and write:

    • the amount of your JPDA income
    • the amount at (o) from worksheet 2 (the foreign tax credit available on your JPDA income this year)
    • the amount at (q) from worksheet 2 (your excess foreign tax credit carried forward from previous years)
    • the amount of any other foreign income and foreign tax paid.

    Sign the schedule and attach it to page 3 of your tax return with your other schedule.

    Check that you have printed X in the YES box at Taxpayer's declaration question 2a on page 8 of your tax return.

    Worksheet 2: Foreign tax credit calculation

     

    Jose

    You

    Your taxable income as shown on your tax return

    (a)

    $118,800

    (a)

    $

    Calculate your tax using TaxPack (see table B1 on page 122) or e-tax
    See note 1 below

    (b)

    $39,386.00

    (b)

    $

    Calculate your Medicare levy and Medicare levy surcharge (MLS) payable on your taxable income using TaxPack (see pages 126-8) or e-tax.
    See note 1 below

    (c)

    $1,782.00

    (c)

    $

    Add (b) and (c).

    (d)

    $41,168.00

    (d)

    $

    Divide (d) by (a).

    (e)

    0.347

    (e)

     

    Your net assessable JPDA income (the amount(s) shown at (k) in worksheet 1 on page 2)

    (f)

    $95,500

    (f)

    $

    Your gift deductions from (item D8 on your tax return)

    (g)

    $500

    (g)

    $

    Add (a) and (g).

    (h)

    $119,300

    (h)

    $

    Divide (a) by (h) (round to at least 3 decimal places).

    (i)

    0.996

    (i)

     

    Multiply (f) by (i) and round to nearest whole number. This is your adjusted net assessable JPDA income
    See note 2 below.

    (j)

    $95,118

    (j)

    $

    Multiply (e) by (j). This is the Australian tax payable on your adjusted net assessable JPDA income.

    (k)

    $33,005.95

    (k)

    $

    Tax paid to Timor-Leste on your JPDA income as advised by your payer. If using e-tax, show the amount at (o) in the 'Foreign tax withheld' column, item 19 (screen 2308).

    (o)

    $18,835.00

    (o)

    $

    If (o) is equal to or less than (k) leave (p) blank and go to (q). If (o) is greater than (k):

    • show the excess at (p) - this excess amount can be carried forward for up to five years and applied as a credit against future JPDA income
    • include the amount at (k) at O item 19 on page 10 of your tax return (supplementary section), then go to Part 2 - Resident of Timor-Leste.
     

    (p)

    $

    (p)

    $

    Your excess foreign tax credit relating to JPDA income carried forward from any of the last five years (if any). If using e-tax, show this amount at 'Other foreign income' (screen 2318).

    (q)

    $0

    (q)

    $

    Add (o) and (q). This is your foreign tax credit for your 2005-06 JPDA income.

    (r)

    $18,835.00

    (r)

    $

    If (r) is greater than (k):

    If (r) is less than or equal to (k):

     

    (s)

    $

    (s)

    $

    1

    If you are using e-tax, go to the note Are you using e-tax? If you had exempt foreign employment income, see Did you have exempt foreign employment income?

    2

    If (f) is greater than or equal to (h) and you have no foreign income, (j) equals (a). If the sum of (f) and your net foreign income exceeds (h), then:

     

    (i)

    =

           (a) x (f)        
    (f) + net foreign income

     

    Go to Part 2 - Resident of Timor-Leste if you ticked D on the schedule. Otherwise, go to Check that you have…

    A recent change to this worksheet removed steps (l), (m) and (n). If you used an earlier version of this worksheet to complete your income tax return for any year from 20 May 2002, you can now use this new version; and if you get a different value for your foreign tax credit (r) you can lodge a request for an amendment for that year.

    Last modified: 14 Nov 2006QC 28035