• 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 2008-09.

    What you need

    • All your payment summaries for the 2008-09 income year.
    • Details of your JPDA income and any foreign tax paid from your employer, your payslips or foreign tax assessments.
    • TaxPack and TaxPack 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 income tax offset 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

    Unless you are using e-tax, complete all parts of your tax return except:

    • O item 20 (supplementary section)
    • Total supplement tax offsets (supplementary section)
    • item T
    • Total tax offsets
     

    If you are using e-tax, include the tax paid to Timor-Leste in the Foreign tax withheld column at item 20 (screen 2308).

    Step 3

    Complete worksheet 2. Worksheet 2 shows you how to work out your foreign income tax offset for your net assessable JPDA income. In the course of completing worksheet 2, you will complete O item 20 on your tax return (supplementary section). 

    Step 4

    Complete the remainder of your tax return.

    Example 1 will help you fill in worksheets 1 and 2.

    Example 1

    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 $17,045. 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, $17,045 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 appropriate hospital cover for the whole year and was not liable to pay Medicare levy surcharge.

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

    Jose will receive a refund of $916. That is, $35,302 (tax and Medicare levy payable), minus $18,835 (foreign income tax offset, minus $338 (zone tax offset) minus $17,045 (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)

    Take (b) away 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)

    Take (d) away 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 (include the tax paid to Timor-Leste in the Foreign tax withheld column)
     

    $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 items 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)

    Take (h) away 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 in e-tax. Otherwise, use (i) at the next step.

    $450

    $

    (i)

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

    $85,950

    $

    (j)

    Take (g) away 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 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.

    Did you have work-related expenses?

    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 items D1 to D5 on your tax return or in e-tax. (Worksheet 1 also tells you where to show the other 90% of the expenses.)

    Items D1 to D5 on your tax return or in e-tax deal with deductions for work-related expenses as follows:

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

    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 items D1 to D5. So, if his $500 included $150 of work-related travel expenses and $200 of uniform expenses, he would write $15 at item D2 on his tax return or in e-tax (10% of $150), and $20 at item D3 (10% of $200), and so on for his other types of work-related expenses.

    Are you using e-tax?

    If you are using e-tax, e-tax will do the remainder of the calculations for you. However, if you want to work out the amount of your foreign income tax offset for yourself, complete worksheet 2 in full.

    Completing the worksheet 2 in full

    You 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. Include the tax paid to Timor-Leste in the Foreign tax withheld column at item 20 (screen 2308).

    Your foreign income tax offset 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.

    You cannot use worksheet 2 if you have:

    • exempt foreign employment income
    • pre-commencement excess foreign income tax
    • other foreign income
    • unapplied foreign losses from prior years
    • other foreign income tax offsets available.

    If any of the above applies, you need to use the Foreign income tax offsets worksheet for individuals (available soon).

    Worksheet 2: Foreign income tax offset calculation

     

    Jose

    You

    Your taxable income as shown on your tax return

    $118,800

    $

    (a)

    Tax* on your taxable income using the rates and calculators on our website or e-tax*

    $35,302

    $

    (b)

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

    $95,500

    $

    (c)

    Take (c) away from (a).

    $23,300

    $

    (d)

    Tax** on (d).

    $2,944

    $

    (e)

    Take (e) away from (b).

    $32,358

    $

    (f)

    Tax paid to Timor-Leste on your JPDA income as advised by your payer

    $18,835

    $

    (g)

    Your foreign income tax offset is:

    • if the amount at (g) does not exceed $1,000, the amount at (g)
    • if the amount at (f) is greater than or equal to the amount at (g), the amount at (g)
    • if the amount at (f) is less than the amount at (g), the amount at (f).
     

    * If using e-tax you must complete all your income, deduction and Medicare items first.

    ** This includes any Medicare levy and Medicare levy surcharge payable.

    Show your foreign income tax offset at O item 20 on your tax return (supplementary section).

    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

    Worksheet 2 is a new version for 2009 as a foreign income tax offset uses a different method of calculation to the foreign tax credit.

    End of attention
    Last modified: 04 Feb 2010QC 21778