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  • 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 2007-08.

    What you need

    • All your payment summaries for the 2007-08 income year
    • Details of your JPDA income and any foreign tax paid - from your employer, your payslips or foreign tax assessments
    • TaxPack 2008 and TaxPack 2008 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
    • tax paid to Timor-Leste.

    What you need to do

    Use worksheets 1 and 2 to complete the following items on your tax return:

    • Income item 1 Salary or wages
    • Deductions items D1 to D5 - work-related expenses
    • Income item 20 (in the supplementary section) - foreign source income and foreign assets or property.

    Follow these steps to complete your tax return.

    Step 1

    Complete worksheet 1 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 20 (supplementary section)
    • Total supplement tax offsets (supplementary section)
    • 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 20 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.

    The example below has been provided to help you fill in worksheets 1 and 2.

    Example

    Jose, a driller, lived in Darwin (zone A) when he was not at a drilling site. For part of the income year he worked in the JPDA. Jose received a payment summary which showed $120,000 gross salary and wages and Australian PAYG tax withheld of $18,089. 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 $18,089 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 donated $500 to the Red Cross. He had no other income or deductions. Jose had no dependants. He had hospital cover.

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

    Jose will receive a refund of $860. That is, $36,402 (tax and Medicare levy payable, shown at (d) in worksheet 2) minus $18,835 (foreign tax credit, shown at (r) in worksheet 2) minus $338 (zone tax offset) minus $18,089 (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.

    Worksheet 1: Net assessable 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

    $120,000

    $

    (a)

    Total gross JPDA income included on your payment summary

    $96,000

    $

    (b)

    Subtract (b) from (a).

    $24,000

    $

    (c)

    Divide (b) by 10.

    $9,600

    $

    (d)

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

    $33,600

    $

    (e)

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

    • E item 20 on page 10 of your tax return (supplementary section)
    • the 'Foreign employment income' column (screen 2308), item 20 of e-tax
     

    $86,400

    $

    (f)

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

    $500

    $

    (g)

    Divide (g) by 10. The amount at (h) is the proportion (10%) of your total work-related expenses that relates to the Australian portion of your JPDA income. Show this amount at D1 to D5 on your tax return, in the same proportions as you would show your total work-related expenses. For more information, read the note Did you have work-related expenses?

    $50

    $

    (h)

    Subtract (h) from (g). The amount at (i) is the proportion (90%) of your total work-related expenses that relates to the Timor-Leste portion of your JPDA income. If using e-tax, transfer the amount at (i) to the 'Deductible expenses' column (screen 2308), item 20 of e-tax. Otherwise, use (i) at the next step.

    $450

    $

    (i)

    Subtract (i) from (f). Transfer the amount at (j) to L item 20 (e-tax will do this automatically).

    $85,950

    $

    (j)

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

    $95,500

    $

    (k)

    * Work-related expenses are explained at questions D1 to D5 in TaxPack 2008 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.

    Attention

    Did you have work-related expenses?

    End of attention

    If you had work-related expenses relating to your JPDA income (that is, you showed an amount at (g) in worksheet 1) then worksheet 1 instructs you to show 10% of these expenses (the proportion of your work-related expenses related to the Australian portion of your JPDA income) proportionately at D1 to D5 in your tax return or in e-tax. (Worksheet 1 also tells you where to show the other 90%.)

    Questions D1 to D5 of your tax return or e-tax deal with deductions for work-related expenses as follows:

    D1 - car, D2 - travel, D3 - clothing, D4 - self-education, and D5 - other.

    In the example shown in worksheet 1, Jose had a total of $500 of work-related expenses directly related to his JPDA income. This means he can claim 10% (a total of $50) at labels D1 to D5. So, if his $500 included $150 of work-related travel expenses and $200 of uniform expenses, he would write $15 at D2 on his tax return or in e-tax (10% of $150), and $20 at D3 (10% of $200), and so on for his other types of work-related expenses.

    Attention

    Are you using e-tax?

    End of attention

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

    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. If your 2008 foreign tax credit is less than the amount at (o), you will have a carry-forward foreign tax credit.

    Transfer the amount you have at (o) on the worksheet in the 'Foreign tax withheld' column to item 20 (screen 2308).

    Did you have exempt foreign employment income?

    If you have included exempt foreign employment income at N item 20 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 registered tax agent).

    On a separate sheet of paper, print:

    Schedule of additional information - item 20 - 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 on the last page of these instructions.

    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

    $118,800

    $

    (a)

    Calculate your tax using TaxPack (see table 2.1 on page 121) or e-tax
    See note 1 below

    $34,620.00

    $

    (b)

    Calculate your Medicare levy and Medicare levy surcharge (MLS) payable on your taxable income using TaxPack (see pages 125-8) or e-tax.
    See note 1 below

    $1,782.00

    $

    (c)

    Add (b) and (c).

    $36,402.00

    $

    (d)

    Divide (d) by (a).

    0.306

    $

    (e)

    Your net assessable JPDA income (the amount shown at (k) in worksheet 1).

    $95,500

    $

    (f)

    Your gift deductions from item D8 on your tax return.

    $500

    $

    (g)

    Add (a) and (g).

    $119,300

    $

    (h)

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

    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.

    $95,118

    $

    (j)

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

    $29,106.11

    $

    (k)

    Tax paid to Timor-Leste on your JPDA income as advised by your payer. If using e-tax, transfer the amount at (o) to the 'Foreign tax withheld' column, item 20 (screen 2308).

    $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):

    • write 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
    • transfer the amount at (k) at O item 20 on page 10 of your tax return (supplementary section), then go to Part 2 - Resident of Timor-Leste.
     

    $             

    $

    (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).

    $0

    $

    (q)

    Add (o) and (q). This is your foreign tax credit for your 2007-08 JPDA income.

    $18,835.00

    $

    (r)

    If (r) is greater than (k):

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

     

    $

    $

    (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 of additional information. Otherwise, go to Check that you have...

    Attention

    This worksheet was changed in October 2006 to remove 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. If you get a different value for your foreign tax credit (r) for any year from 20 May 2002, you can lodge a request for an amendment for that year.

    End of attention
    Last modified: 01 Jul 2008QC 27922