Work out the adjusted net foreign income (ANFI) for each class of foreign income. This involves allocating any apportionable deductions that you are able to claim between each class of foreign income. Apportionable deductions are those deductions of a concessional nature which do not relate directly to income-producing activities-for example, gifts to eligible charitable organisations.
If you don't have any apportionable deductions then your ANFI will equal your net foreign income.
There are 3 methods for working out ANFI. Where net foreign income is less than the sum of taxable income and apportionable deductions, as is most often the case, ANFI for each class of income equals:
Net foreign income × (taxable income ÷ [taxable income + apportionable deductions])
The other methods are:
- If your net income consists of one class of income and the amount exceeds the sum of your taxable income plus apportionable deductions, your ANFI will equal your taxable income.
- If your net foreign income consists of 2 or more classes of income and your combined net foreign income from all classes exceeds the sum of your taxable income plus apportionable deductions, your ANFI for each class will equal your taxable income divided proportionately into each class of income.