You may claim the following deductions for each class of assessable foreign income:
- expenses directly related to that class of foreign income
- other deductions relating to that class of foreign income
- a share of the apportionable deductions - that is, deductions that cannot be related to a particular type of income - for example, gifts
- unused quarantined foreign losses from prior years
- prior year domestic losses, if you make an election to offset those losses against a class of foreign income
- if your allowable deductions for the current year are more than your domestic source income, the amount by which those deductions are more than your domestic source income.
See appendix 3 of this guide and Taxation Ruling IT 2446 for more information on allowable deductions.