Applying a foreign income tax offset against Medicare levy and Medicare levy surcharge

If you’ve paid tax on income you earn in another country, you may be able to claim a foreign income tax offset. The foreign income tax offset provides relief from double taxation.

This applies regardless of whether Australia has a tax treaty with the foreign country where you paid tax.

Your foreign income tax offset (FITO) reduces your tax payable for an income year. If any FITO remains after that, you can use it to reduce your liability to pay Medicare levy. Then any further FITO reduces any liability to pay the Medicare levy surcharge.

Our systems apply the FITO against the Medicare levy and Medicare levy surcharge in all the applicable individual tax returns lodged.

For more information on the rules, see Guide to foreign income tax offset rules. These rules apply for income years that start on or after 1 July 2008.